Getting back into digital. Please help.

IMHO, nothing competes with a good vinyl front end. If you are looking to spend up to $5K used, you should be able to find an ARC CD7. That would be my first recommendation. Or you might want to try a Rega Saturn combined with a good DAC.

The best digital I have heard so far is Naim's new HDX but at $8300 that is outside of your stated price range. As much as I love vinyl and even though I really enjoy my ARC CD7, if I happened on a used Naim HDX in the $5K to $6K range, I would nab it. Extraordinary sound. The closest thing to vinyl I have ever heard. And the convenience features are numerous and user-friendly.

plinko: you posed the question as to whether the new USB DACs sound good. the demo I attended at definitive settled that question in my mind completely, which is why I said in my original post that I'd go the hard drive route if setting up a digital front end now (I already have a very nice CDP so I'll wait a bit before switching). I'd strongly urge you to try to audition a HD setup. I realize you said you don't have a dealer nearby, but remember: the HD is just a computer product ($500 or less) and the CD info extraction software is cheap. the only thing you'll need to buy from an audio dealer is the USB DAC. the nicest ones are pricey, but you'll get great sound from redbook as well as future-proofing (the ability to play hi-rez downloads) and you'll have the convenience of an ipod, with your entire collection accessible from a little hand-held device. I believe I heard them say you can get software that allows you to use your iphone to control HD systems. you might just call definitive and chat with them - they're very nice and professional (I have no interest involved here btw).

Musicslug. Which USB DAC did you listen to?

if I recall correctly, I listened to an Ayre and a Linn

Consider the Lector line. My 0.6 model has a true tube (12AT7) output not just a tube buffer and gives a near analog presentation for a resonable cost. It is not bright and forward but slightly dark and dynamic with very good detail.