Tm - the digital out sources from the iPod, but its through the special docking station that it is accessed. These stations usually have S/PDIF coax and Toslink outputs. There are 3-4 docking stations like this, including the Pure i20 and the Wadia 170. They also have remote controls with volume, but it is best to leave the volume at max on these and use either a DAC or preamp to control volume.
Steve N.
Empirical Audio