iDunno iPod from iTouch, so don't ask me ...
Good to hear you figured it out. Seems like the iPod would require an analog jack to work properly and the D2 went pure digital. The D1+ has the analog inputs, both headphones and RCA. That's the one I went with as I plug my turntable into the DAC via an external stage.
iActually have both the D1 and D1+ here. iMHO both outstanding DACs. iPrefer the USB output to the optical here and the D1+ has been a major iMprovement with the addition of the Tenor chipset. iBelieve the D2 uses the same USB interface but made major changes to the TosLink side.
Be sure and post up your thoughts on SQ after you've had a chance to play with it a bit. iThink it's one of the better bargains out there and performs well above it's price point.
PS ... hope you got the GE tube upgrade ... runs rings around the stock Chinese unit. If not, I can provide a list of available options for rolling. Right now I'm running a Tesla 6CC42 ... pricey, but hey, I'm worth it.
iAssUme the OPA627 op amp upgrade also makes a difference - I've got both those and the original DACs here, and the OPA627s really open it up. They did change the Dacs in the D2, so can't really comment on what the upgrade would do for you.