XP

XP can deliver bit perfect output if:

The way KMixer works is documented in KMixer Driver Sample Rate Conversion and Mixing Policy.

 

A common way to overcome the design flaws of XP is to use ASIO (Audio Stream Input/Output) drivers as they communicate directly with the sound card by passing the audio part of XP.

Of course, your sound card must support ASIO to do so.

 

Aqvox recommends using ASIO drivers with XP in combination with their USB DAC. They also supply an installation instruction.
Benchmark recommends NOT using ASIO drivers in combination with  their USB DAC.

Beware of 'Custom' Drivers!

Until now, high-resolution USB audio devices required 'custom' drivers. These drivers may compromise the stability of the operating system, and may cause conflicts with other installed devices. In addition, custom drivers usually consume more system resources (memory and CPU) than native solutions.
It is also interesting that many of the ASIO high-resolution USB devices we tested failed to deliver bit-transparent audio. In contrast, many of the native USB audio devices delivered bit-transparent audio. Our tests show that custom drivers do not guarantee bit-transparent data transfers, and that bit- transparency can be achieved without custom drivers.

Source: Benchmark Media

Both agree you don't need this stuff in Vista.

XP versus Vista

There are claims that Vista sounds better than XP.

As usual in audio, this claim raised controversy: http://www.hydrogenaudio.org.

 

Compared with XP, Vista has

At the time I wrote this page, Vista was rather new.
Today you probably won’t go the Vista way as there is Windows 7.
However there isn’t much difference between Vista and Windows 7 as far as audio is concerned. Windows 7 offers some minor improvements but the core audio remains the same.

References

Bypassing Windows Kernel Audio Mixer - Audial