Odd ... I am running the same DAC fed via a Windows box with FLAC files. The sound is at least as good and in some cases I feel its slightly better than my Wadia 23 CDP. It's pretty amazing. That being said, I am bailing on Windows and going to a Mac mini. I am also converting the whole collection to Apple lossless. I have tested the Apple lossless format files converted from FLAC and I didnt hear any difference on my Windows 7 box. A couple things you might try,
Encode a CD of MP3 files - as high a bit rate as you can and see if the sound improves. If the problem is transcoding to Apple lossless maybe the MP3 encoder will give better results. If it does improve, it must be someting in the lossless encoding. If not maybe your files are fine and it's an OS or itunes setting.
Do you have access to someone with a different Mac setup? Encode the files on a newer Mac and burn them to a CD then copy them to your Mac then see what the sound is like. I figure its something in the file encoding/creation OR in the playback stream.
Are there Apple based alternatives to iTunes? Might try a different player.
Encode a CD of MP3 files - as high a bit rate as you can and see if the sound improves. If the problem is transcoding to Apple lossless maybe the MP3 encoder will give better results. If it does improve, it must be someting in the lossless encoding. If not maybe your files are fine and it's an OS or itunes setting.
Do you have access to someone with a different Mac setup? Encode the files on a newer Mac and burn them to a CD then copy them to your Mac then see what the sound is like. I figure its something in the file encoding/creation OR in the playback stream.
Are there Apple based alternatives to iTunes? Might try a different player.