Computer output to DAC, which route?


I have disbanded my main system because I am using my computer system more and more. I am going to purchase an outboard DAC for my computer, but I want to know something:
My computer comes equipped with COAX and TOSLINK outputs on the motherboard. Should I use one of those or use a DAC with a USB connection? WHat are the pluses and minuses of each way if any? I am using typical Altec Lansing speakers (good for what they are) but will probably move up to active Dynaudio monitors in the future. All music is sourced from itunes in either AAC or apple lossless formats.

Thanks in advance!
phoenix469
Ben (Thesauce),

What power supply upgrade do use with your Trends UD-10? I just bought the trends but do not yet have a power supply.
Is Ethernet RJ45 better than USB conversion to optical or XLR coax? The Linn Klimax Ds chose it.
One of the best options for PC is the apogee rosetta 200 with X-firewire card,with its own drivers.
What is the sonic difference between Media Monkey and Foobar2000 media players (for PC's)

The user interface and the library functions for indexing your media look better in media monkey at first glance. Could you use Media Monkey to rip and organize your CD's and have Foobar2000 play the FLAC files from the Media Monkey database?

It seems that one should install an Asio driver but not all media players support this particular driver (Media monkey???).

I have no experience what's so ever with the software or the possible outputs from the PC.

(I have a Sonic Fronteirs DAC (older DAC) and a spare PC.... the simple cheap solution seems to be a hagUSB converter to my exiting coax digital cable.)

Thanks
I use dBpoweramp for ripping and media monkey for playback. With Windows Vista, which I have, or a MAC you have no need for the ASIO driver anymore. That was a kernel mixer workaround for older versions of Windows.

A relatively cheap converter like the Hag or the Trends would turn you're non-USB DAC into a USB DAC so to speak. And theoretically this would be better than a direct coax connection to your computer's internal soundcard. Of course other much more expensive options, such as the above mentioned Apogee, also fit the bill.