External power supply design - Audio Microphone preamplifier . AC vs DC
I would move the entire AC section out of our box as you're really not removing the 60/50Hz AC out of your device, you're just reducing the amplitude from 120Vac to 20Vac.  That might make a difference but I would expect you'd see more if you just kept the AC as far away as possible and only had DC going into the device.
But if your AC to DC side is filtered and shielded correctly you should be able to keep it all in the same box.  It sounds like you could have a problem with not blocking AC, or creating a circuit that easily accepts that 60/50Hz noise.
If you can, check for 50/60Hz signals with an oscilloscope on all your DC power rails.  If you're seeing it there you need to improve filtering.  If you're seeing a different frequency then it's not coming from the AC mains section of your power supply.
Hope that helps,
(I'm saying 50/60Hz as AC mains frequency depends on region)