someone help me please i am a newb


I am new to high(er)-end stereo, i was recently given a stereo system that I would like to start adding to. I have a Mcintosh C33 preamp into B&K ST140 stereo amp and dual 1218 turntable and i want to either 1)get a DAC to play my digital music catalogue stored on my dell inspiron 530 or
2)screw it and upgrade to a better turntable

I have a budget of ~$500-$750

that said, i would like to understand computer to DAC playback/setup...like, should i be concerned about the quality of my computer/usb output?...or does the DAC pretty much negate that?...and maybe some of you could suggest other things i need to think about, thanks
offskooring
Sorry...of course I meant---Don't let anyone tell you that you CAN'T get hi-fi from a computer.

anyway good luck...feel free to email me with questions about a pc/dac solution...be glad to share my experiences.
You haven't mentioned if your digital files are stored in a lossless format or the more common lossy MP3 format. If they are MP3s, the first thing to do (if you own the original discs) is to re-rip using something like JR River jukebox or Media Monkey in a lossless format like FLAC. Then I would recommend the HRT II+ USB DAC which costs $350 new and is powered off the USB bus so you can easily take it. I'd add a pair of decent RCA interconnects that you can buy used here for $100 and you would be good to go. The USB cable, to my ears, is not that important. If have some $ left over you might want to upgrade the interconnect btwn the pre and the power amp if its a basic freebie type.
The Peachtrees are the best for the money with USB inputs. Make sure your files are lossless or better as Swampwalker stated. I have a Musiland MD-10 which is great for the money.
Here are a few questions that should help responders more accurately provide advise. How old are you? How much are you willing to spend on your audio system over the next five years/10 years? What percent of the time do you sit and listen to your system as a primary source of entertainment and what percent as background while doing other things? How many LP's do you own?
Sgunther:
-36years old
-I have 4 kids under 6 right now and working on paying off a mortgage in 5 years, that said, i think i could reasonably say~$5000 into my system seems reasonable
-i have no cable, no internet at home so when i do look for entertainment it is music or dvds. I would say 95% of h time i listen to music it is sitting in front of speakers with full attention on music, 5% background for reading/cleaning/playing with kids
-I honestly don't know how many LPs I have, i just started vinyl last winter...if i had to guess I would say ~50 that I listen to (then there is the crapload of "sing along with mitch" and big band records i picked up from my grandfather when he passed).