The sound interruptions are caused in the IP-Bus cable (analog connection) between CD-UB100 and your headunit. That’s for sure. It cannot be because of a hard disk malfunction or USB connection interruption between HDD and CD-UB100, either way they’ll result to error, and sound playback will stop. One other thing I’ve learned from this post is even when you have an external power source attached to your hard disk, you can’t use a long USB cable, because then though spinning fine, the HDD won’t be detected. Again I emphasize, in case of a USB connection interruption, playback will not be interrupted and then resumed, it will result an error, and playback will stop, like when the HDD is not detected!
Your problem is with the analog section, in the IP-Bus cable, between CD-UB100 and the head unit, where three pins (L, R, G) carry the analog sound produced by CD-UB100 to the head unit.
Because you’ve got a high-quality head, what you've noticed about the sound quality difference between when the same file is played on internal CD player or on CD-UB100 is justifiable, because according to this you paid for two MP3/WMA/AAC decoders, a high-quality one inside your head, and a low-quality one inside the USB adapter! Maybe when DEX-P99RS with its internal USB port is around, better sound quality will be produced through USB thumb drives and HDDs.