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
If you are sticking with iTunes then you have a couple of choices to achieve a high-quality result:

1) Use a MAC and USB converter such as the Off-Ramp, HAGUSB or Trends UD-10 (avoid USB with iTunes on a PC)

2) Use a PC or MAC and the AirPort Express driving a Pace-Car reclocker to get low-jitter

Avoid using the direct S/PDIF outputs from the laptop.

Both of these require an outboard DAC. A standard DAC with S/PDIF input will work, but a DAC with I2S input will work better. Depends on your budget and how good you want this to be. If you want it to rival Vinyl, then the I2S interface and a really good DAC are necessary.

Steve N.
Empirical Audio
OK, thanks for the input. I am limited to using a PC, not a MAC. A MAC is not in the budget and I have a high performance PC already. I don't need to go wirless as I plan on doing my listening while in front of my computer, so everything can be wired right off the computer itself. I had a MHDT labs Paradisea at one point and was thinking of purchasing it again. I just want to know if I need to spring for the USB option. Thanks!
Eandylee - iTunes should not be used with USB on a PC. Results are not great. Prefer MAC.