I believe the coax input of your Audio Note will only recognize 16/44 redbook. What is the resolution of these native flac files? My experience with upsampling is it really doesn't add any new information. It is just allowing you to use a different path to decode the signal and therefore might sound better. Your Flac files into the audio note usb will probably never sound as good as playing cds into the coax input. By the way I have an Audio Note cd2 transport and an Audio Note2.1B dac as well as a Metrum Hex
Alan
Alan