I guess because some are over complicating the reality in differences here...
The fact is END user equipment and storage of files are going to dictate how good, or high end you really can make any of these files sound.
1 - When possible highly suggest not using a full blown PC or Mac running standard operating systems, best to have a dedicated simple music server interface when possible. This also eliminates the noise and processors adding heat, and power draw from already insufficient power supplies for audio.
2 - Definitely try to use SSD drives and Flash drives. Again dumps excess power draw on already non-audio power supplies, gets rid of Mechanical movement, and noise which is similar to eliminating the CD transport in the first place and running static files off a hard drive. No real lag, buffering etc...
3 - Yes it is difficult to accomplish this because most "Audiophile" dedicated server components with a basic visual interface to access files can get ridiculous in price considering you can buy a near top of the line Laptop today for $400 to $700 and do your taxes, run audio, stream movies, and every other business, and gaming function on the planet when these stand alone machines with one piece of software, and basic USB interfaces can cost you in the thousands.
4 - I agree you need to source the FLAC files from a good lossless process, rip with DB poweramp, convert with DB poweramp etc...