USB DAC or USB to SPDIF conv. + non USB DAC?

You will still be limited to USB's output that way, so I would stick with a good USB DAC.

If your PC is a desktop, you can always buy a sound card with SPDIF output. This along with the proper OS will allow you to have more options.

You could also go wireless, such as to a Squeezebox, and then use its S/PDIF digital out. Another option is to connect peer-to-peer with the Squeezebox via Ethernet. In my experience, this Squeezebox solution is sonically superior to inexpensive USB converters or USB DACs. You will be limited to 16/44 unless you want to step up to the Slim Devices Transporter, which gets you to 24/96.

It is my understanding that a USB connection will limit the sample to 44.1 or 48Hz (correct?)

Incorrect. Both the Benchmark DAC1USB and the Wavelength Cosecant (Numerator) will allow 24/96 rates via USB.

Thank you all for your responses.

Unfortunately, I cannot afford a Tranporter or anything from Benchmark or Wavelenght: My budget is $500. Even a used Brick ususally goes for more than $500.

Will probably go with a USB DAC. Maybe the new Cambridge DacMagic ($450 @ Audio Advisor).

Hey, Restock - any idea why/how the Benchmark and the Cosecant can do 24/96 via USB while the less expensive USB DACs can't?