To answer your first question, my DAC is powered by a wallwart power source. It should not be taking power from the RPI.
Second, I followed the protocol outlined in your link. Changed the mpd.conf file to add format "*:16:*" in its correct location, and then rebooted MPD as per the command prompt. With this modification I was able to navigate through my library and queue songs, but the same issue persisted (a few flashes, 2 seconds of play time, and then stopping).
Hello asilker, Just a thought... There are two versions of the 1534 chip. There is the TDA1543 with I2S or "European format" audio input and the TDA1543A with Left Justified or "Japanese format" audio input. If it's a TDA1543A, this could be causing the problem. I see there is a line in an earlier post with the text "format: S16_LE", the important part of this is the "LE" (little endian) which makes the output I2S. Changing it to "format: S16_BE" (big endian) makes it left justified. You may be able to simulate BE/LE setting using a PC with Foobar or you could just take the cover off the DAC to check the chip type.
If it's a TDA1543 (without the A) then the line "format: S16_LE" is correct. If not, I have no idea how to change the settings.