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
I have a similiar question. Currently, I use Vista/Album Player(Jukebox Software)/coax to a Yamaha receiver to play WAVs ripped via Windows Media Player. This system is listened to while playing pool. The touchscreen jukebox sofware is awesome for this application.

My problem is that I also would like to output the same signal to my distributed/whole house audio system and perhaps my dedicated HT rig via multi-room outputs. The Yamaha has multi-room analog outputs, but will not convert the coax input to an analog output required for this application.

The most cost-effective, best sounding solution to me is a DAC or USB DAC. I think the current set-up sounds pretty good for background/parties and I listen to my dedicated rig for more serious listening.

What would be the most value oriented solution? Coax to DAC or USB to DAC? Which product would you recommend?
Thanks for that input Thesauce! I am just now looking at the UD-10 as the interface between my laptop and the main system. My only concern is that the UD-10 is not a 2.0 USB. Maybe that's not an issue?? I'm having the laptop modified to handle my library - only . . .and was going to have them install a couple of 2.0 ports. Your thoughts? Puerto
Puerto,

No need for the USB 2.0. USB 1 has more than enough bandwidth to handle 2 channel audio.

Enjoy!
Thesauce - USB 1.1 supports streaming audio, but most USB 1.1 interface chips (in the computer) will probably create more latency than USB 2.0 chips, so eliminating pops and ticks may be more difficult with USB 1.1.

Steve N.
Empirical Audio
Ok, going to place the question here. MacMini has no outputs except the mini RCA jacks it looks like. Have not bought one was thinking this might be one way to go. Was thinking of using a Mac Mini with itunes. But will I get decent sound out of the Mac/