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
I agree that you should avoid the digital outputs on your computer. If you are thinking high end I would bypass the USB as well and stream to a Transporter although it does require ongoing computer tweaking to get the most out of it. I also have a Sonos which also bypasses USB, is great and much easier to use (my wife loves it but never once touched the TP) but not as high end.
Ben (Thesauce),

What power supply upgrade do use with your Trends UD-10? I just bought the trends but do not yet have a power supply.
Is Ethernet RJ45 better than USB conversion to optical or XLR coax? The Linn Klimax Ds chose it.
One of the best options for PC is the apogee rosetta 200 with X-firewire card,with its own drivers.
What is the sonic difference between Media Monkey and Foobar2000 media players (for PC's)

The user interface and the library functions for indexing your media look better in media monkey at first glance. Could you use Media Monkey to rip and organize your CD's and have Foobar2000 play the FLAC files from the Media Monkey database?

It seems that one should install an Asio driver but not all media players support this particular driver (Media monkey???).

I have no experience what's so ever with the software or the possible outputs from the PC.

(I have a Sonic Fronteirs DAC (older DAC) and a spare PC.... the simple cheap solution seems to be a hagUSB converter to my exiting coax digital cable.)

Thanks