Hi ianhaynes,
Is this a limitation of my DAC card (IQaudiO Pi-DAC+) ?
Yes.
You can try to disable DSD on the mpd settings page (MENU->MPD).
MPD tries to convert the files on the fly to pcm and they should play.
Depending on the device (PI1, PI2 or ODROID) this may lead in stuttering because it's a resource hungry process.
See also
here.
Frank