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I 100% agree with the PC audio suggestions. I cannot go back. I prefer a PC + high quality external soundcard + DAC to a Squeezebox, but the benefits are the same.
High quality soundcard (in my book) = anything that'll pass bit-perfect digital audio to a DAC, supports ASIO, and has reasonably low jitter. Try the Red Wine Audio USB Select or the Empirical Audio Offramp. If you'd like to save some money, try a stock M-Audio USB Transit; you can have it modified later. If you're looking for an internal soundcard try Lynx or RME professional cards. Software: Ripping - Exact Audio Copy (free)Encoding - FLAC (free) Playback - Foobar or Winamp (with FLAC and ASIO plug-ins)If you set EAC + FLAC up correctly, you can come up with a very organized file system. I break my music down by genre, then by artist, then by album. I find it pretty easy to find what I'm looking for.
A decoded flac and the original wav are bit-for-bit the same. You may play FLAC directly with no loss.
Another hard drive based option is the Olive products. They provide all the function of the Squeeze Box plus hard drive and CDP, so they stand alone from your PC. As they use laptop hard drives the capacities are less, but no PC network, hardware, or software headaches to deal with. After living with a Squeeze Box I'd go Olive instead because:1. Avoid all those headaches;2. Don't have to rip a CD to listen to it (after 6 months I still have hundreds of CDs I haven't bothered to rip, so I haven't heard these "B" recordings in all that time);3. When modded by Red Wine Audio they're supposed to sound better than the modded Squeeze Box.