Thank you Jim, I really appreciate your time and information. You are very generous with your replies!

To recap, you are saying that for 2-channel, 16-bit, 44.1kHz S/PDIF, Toslink (compared to coax):
1) Is less reliable for acceptable transfer of such data, due to insufficient bandwidth;
2) Has an LED emitter/receiver that produces electrical noise and bandwidth-restriction, corrupting data transfer through induced jitter;
3) These problems remain even when such signal is received by an upsampler, or a reclocking DAC.
I *think* the above summarizes your points accurately - if I am misunderstanding you anywhere, I trust you will please correct me.

Thanks again Jim! The HagUSB looks really nice.
9/22/06 Edit: Your site says the HagUSB works with Windows XP. Does it also work with Windows 2000?