Should I be using the optical or USB input on my D1?

Both USB and Optical should provide the same high-quality digital signal to your D1.  In most cases where both USB and optical are available, we usually recommend USB since it's a shorter signal path.  The only real difference is that the optical input on the D1 can support up to 192KHz input if your source supports it.  We'd certainly recommend trying both if you have them available to see if you can notice any difference in your setup, and with your audio files.