David,
1. All file formats stored on the HD will be sent to the BDP-2, regardless of whether its an internal drive (SATA), or external HD with either eSATA or USB.
2. I found a very subtle sound difference in different set-ups, but ultimately felt this was related to the power supply of the HD. The best sound was from internal SATA and the worst was on an external that used a separate wall-wart power source. An external USB bus-powered SSD was better, which is my current setup.
3. The ease and speed of transferring files from my PC was the most significant factor in choosing my setup. With an internal drive, data has to be loaded from the PC via the Ethernet connection, which is very slow. Transferring data from an external to internal HD thru the BDP-2 is quicker, but still slow for these large files.
So, I ended up with an external SSD (2TB Samsung 850 EVO-Pro) which can be detached from the BDP and connected to my PC for fast file loading. Plenty of room (for now
). The PC to external HD transfer takes full advantage of USB 3.0 speeds, and of the superior write speeds of the SSD, whereas BDP-2 drive to drive transfer is only at USB-2 speed.