Hopelessly mid fi?

Its a bit difficult to answer your question when you have "intentionally withheld" the imformation on your CD player, but nevertheless.

In my experience, the difference between compressed files and Lossless, is very clear even just listening through the iPod itself - it shouldn't need a highly resolving system to discern this difference (though I imagine the rest of your system is actually pretty resolving anyway). Likewise, when I had my iPod docked in an Arcam dock feeding an analogue signal to my amp, it was clearly inferior to my mid-price CD player and that was playing lossless files. I found the best way to listen to my iPod was through the Wadia 170i Transport which feeds a digital signal from the iPod to my outboard DAC via a digital jitter suppression device. In this context, the sound from the iPod was equal to the CD player with the same jitter reduction device and the same DAC. Please see my review of the Wadia 170i here on A'gon for more information.

If you can't hear the difference between the various sources you described, I wouldn't be looking to spend $2k to try and hear the difference - if you enjoy the sound of any of the combinations you already have, be happy and buy more music. :)

If you are fixed on upgrading your source, I would look at investing in a decent DAC (some outstanding ones at under $2k) which would provide a significant upgarde to your CD player and SB. Alternatively, the Wadia iTransport plus a decent DAC is another outstanding option but get a DAC that does its own internal jitter reduction.

Computer drives are reportedly superior transport mechanisms. Evidently the data the computer uses must have very very low jitter and a clock that ensures an accurate constant data stream.
I assume all this is not actually the reader but the correction elements.
I have always been surprised how good computer generated music sounds even when burned onto a CD for use in an "audiophile" CDP.
Unless you have a very special CD player the transports invariably fail before any other elelement. An older CD player even a once great player that uses one of the 2 common transports, will start sounding progressively worse over time.
I recommend borrowing your audio nut buddy's almost new but burned in just this week EMM,Meridian, Esoteric etc. player and do the comparison.
If you have an old player that still works lying around compare it to the name intentionally witheld player. Suddenly it will sound fantastic. You will save serious money that way. Then buy the Wadia Dac.

Were the lossless files ripped error free?

If not night and day diffs, the replay should at least sound more rounded and natural with the lossless files.

The comments here on a dejitterizing and worthwhile DAC are true! IME Either way... PC audio or disc player.

Much to my chagrin, the difference was minimal at best.

This matches my experience. I find differences are relatively subtle - often far less than typically found between a good recording and a bad one. I had a friend over and he could not hear the benefit of a separate DAC versus the straight sound from my DSP preamp. I have to admit it was close but once you pick up on the slight differences and begin to know what to listen for then it becomes much more noticeable. However, I'd agree with anyone who said it was not "night and day".

Thanks to all that responded. Blindjim, I do rip using error correction. And the differences I could detect had to do with soundstage width and to a lesser degree, depth. While not an indictment, the CDP is a Cary 303/200-which I have always liked. And Hens, I wouldn't say I am unhappy with the sound of my system per se, just trying to sensibly extract more from it. Haven't changed things in awhile. All recommendations welcome. Thanks again.