Update from a friend of mine...
XP has four methods for outputting audio via an audio device. DirectSound, WaveOut, ASIO, and kernel streaming.
DirectSound and WaveOut go through kmixer. ASIO and kernel streaming don't.
Depending on which output you pick, you get what you get.
Going through kmixer = not bit perfect.
iTunes/XP is a pure DirectSound/WaveOut application. It uses QuickTime as it's I/O processor, and all the filters and codecs are buried in QuickTime. They don't register as codecs in XP. This is important in that the Apple Lossless Codec can't be used by other programs.
The only QuickTime options I can get to show up are DirectSound and Wave Out. I cannot patch in an ASIO plug-in.
Even if I use S/PDIF out, there is still a Windows volume control present, which means kmixer is active. Even if you don't have Windows XP volume control panel active, kmixer still may be active.
The only real test I've found to determine if kmixer is active is to play a DTS/DD encoded bitstream to my Fosgate /Audionics FAPT-1 Pre/Pro and see if it will decode it properly. If Bit perfect, it will decode. I cannot get iTunes to do this using any soundcard I have, including the M-Audio Delta 410, an 8 channel 24bit 96 kHz card.
Even if there is no kmixer, the soundcard you choose MAY RESAMPLE. Means that you could put in a 44.1 kbps .wav stream, only to have the soundcard upsample to 48kHz and then downsample back to 44.1 kHz ARGHHH!!! Many of the Creative Labs SoundBlaster cards do this because all their processing algorithms only work in a 48 kHz 16 bit space. All of the AC3 soundcards do this, and most output stereo audio as a 48 kHz bitstream.
Now the conjecture:
Proprietary applications may bypass kmixer. Some RME cards may do this, perhaps by using the kernel streaming function in XP. Sounds plausible, but.....no one has confirmed it will work with iTunes. Need to verify.
USB audio devices are just like any other audio device to XP, and have the same options (directsound, waveout, asio, kernel streaming). With iTunes and XP, since ASIO and kernel streaming are NOT options, then, even with USB, you are not bit perfect.
Conclusion:
There is no proven bit perfect solution for iTunes on a PC based platform.
This leaves the following options:
1.) Convert Apple Lossless files back to .wav files, and check for bit-perfect output via direct file comparison.
2.) Buy a MAC.
3.) Hope that future versions of QT will allow an ASIO plug-in. (Unlikely due to the Apple plug-n-play philosophy.)
4.) Hope that someone will supply an ALC equivalent as a stand alone codec.
