We are tring to decide how many days to get on our German Railpass. Can it be used for day trips such as Munich to Salzburg, Munich to the castles (Fussen) and Munich to Dachau or would we be better off to just pay for a tour to these places? If we use a railpass to Fussen are we within walking distance to the castles or would be need extra trasnportation to the actual castles? Thanks for any advice you can give me.
If you are visiting only the places you mention in Germany, then do NOT buy a railpass. A railpass is only worthwhile if you are making several long-distance treks.
You can get from Munich to places like Salzburg and Füssen or anywhere else in Bavaria on a Bayern (Bavaria) ticket. It's a daypass good for 2-5 people on the regional and local trains and buses and costs 28 Euros. Use it after 9 am weekdays, anytime on weekends. There's no need to order these tickets from home. You can buy them in Germany at any DB ticket machine. It's 2 Euros more to buy it from an agent at the station.
Other states besides Bavaria have similar tickets. This page explains it all.
Daypasses
We will be using a railpass for transportation from Frankfurt to Berlin, Berlin to Munich, and Munich to Zurich.
Those routes make a better case for the German Railpass. Of course it's only good to the Swiss border. You should compare the cost of a 3-day German railpass with the cost of individual tickets. for those routes. Advance sale tickets can be quite cheap for Germany. You can find 29-Euro tickets for Berlin to Munich, for example, at the...
German Railways itinerary page
For your daytrips in Bavaria, the cost for extra railpass days on any railpass you buy is very likely more costly than the price of the Bayern tickets.
Dachau is a suburb of Munich and is within the MVV (Munich metro district). Your entire transportation from downtown on the S-Bahn (S2) plus the bus (#728) to the Memorial and return will be covered by an MVV XXL Partner (2-5 P) Tageskarte (day ticket) for €12,30. The Tageskarte will also cover any other travel (by U-/S-Bahn, streetcars, or buses) that day within the inner two zones of Munich. A rail pass would cover the S-Bahn but nothing else.
If you go to Füssen (Fuessen) for a day, the Bayern-Ticket will cover not only the train to the Bahnhof, but the bus (about 10 min) from the Füssen Bahnhof to Hohenschwangau, location of the castles. Again, a railpass would not cover the bus, but it is only a few Euro. For more info on getting from Munich to the castles, see here.