I have a USB DAC for music playing, and when the guest OS is busy it is causing skipping on my music play back.
Can I prevent the guest OS from seeing this device entirely, or do I need to change something in the guest to prevent using it?
Without special setup the gust will not use your USB device at all. The problem is that the high load on your guest will also lead to higher latency on your host and this can cause crackling, glitches, skipping, ...
You will need to limit the resource usage in the settings of your VM, especially CPU load. I don't know if this is possible in VMware workstation but at least VirtualBox has the option to limit CPU usage of it's VMs to a percentage of the host system's CPU power. Another way might be to reduce priority or maximum load of the VM process on the host system. This option would depend on the OS of host system.