Logitech Duet sonds awful

I recently installed a Logitech Duet in my stereo and it sounds digital and gritty. I'm saving my cd files to WAV with Apple's Itunes and listening through the Logitech receiver with both digital outs to a Entech DAC which sounds better with my Ipod with the best resolution MP3s (highest resolution) and I'm wondering if I was naive in thinking that the digital wireless transmission wouldn't affect the sound.