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You do need to connect the digital cable to the DI/O first, then plug in the power cable.
Set the sampling rate to ext. The little green light should blink for a short while and then lock onto the sync signal.
Then you should hear the music. The DI/O is NOT an upsampler. DO NOT use it on 96 or 48 khz settings. Let it get it's signal from the clock of the transport.