1. Hard to tell. I2S and DSD aren't standard interfaces for consumer electronics. Besides, they are formats, you could run both over a single input. So the real question is what you're going to do in terms of usage of connectors.
2. At least one is needed for the SPDIF inputs.
3. If you have to ask this I doubt you are ready for it, but you switch IP_S and the OTTO with 2 digital outputs, one for each. It's all software, so you really need to know a little about programming and about electronics.
4. You could use the 2-bit Selector board. This uses 2 digital inputs. For you I think I would look at a more hardwired solution however.

With 2 Otto's and the IP_S to operate your easiest way to do this will be controller based. Look at http://hifiduino.wordpress.com/code/ for an Arduino based setup, and adapt the code according to your needs.

Nice Solution Brian! :)

The Buffalo-IIISE has one I2S/DSD input (D1,D2,DCK,GND) and one S/PDIF input. You can switch between them using the IP_S pin header.

If you want to add multiple S/PDIF inputs, you need a digital mux of some sort to select from one of the inputs to feed the single S/PDIF input.

We have two options for this: OTTO-II and the new 4:1 Mux/Demux (see pic).

The two modules you mentioned don;t actually do any switching, but are designed to utilize the MUX built into the ES9018 chip. The 4-channel S/PDIF level converter converts consumer-level S/PDIF to TTL-level, all at the same time. (The B-IIIse has this level conversion built in for it's single input.) The switch kit tells the DAC which input to use.

(Incidentally, the switch kit it also used with our 4:1 S/PDIF Mux module, as well as the new 4:1 Mux/Demux.)

The OTTO-II can switch between 2 sources (but up to 4 channels), and the 4:1 Mux/Demux can switch between 4 sources (single channel).

If you have two S/PDIF sources, you could use either of these modules.

The 4:1 Mux/Demux (man, we need a better name for it ) will be available for sale later this week, once I complete testing.