HDtracks Music Libary Software For Macs

Sidssp is correct. iTunes will play play 24 bit files and does not play FLAC. you can easily transcode AIFF or ALAC which are supported by iTunes with free third party software like XLD.

One thing iTunes will not due is automatically switch between 16 bit and 24 bit sample rates and it is slightly tedious process to do so. This is one of the nice features of the third party playback like Amarra, Pure Music and Audivrana Plus which work with iTunes is the auto switching of sample rates. On top of that I, along with many others, hear significant audio quality improvements using one of these for playback allowing iTunes to simply act as your music database manager.

Will agree with above posters - just stick with your itunes database and use a third-party player like Amarra, Pure Music or Audirvana Plus. All of them offer free trials so you can try before you buy, compare as you dare! I currently use Max for converting FLAC to AIFF - very easy to use, works like a charm and there is a tutorial on how to use it right on the HDTracks website. After initial set-up as per the tutorial it literally is as simple as clicking and dragging the files to be converted - and the software is free!

You don't need any of those to use the Squeezebox, but keep in mind they just discontinued them yesterday.
My music is mostly on an external 2TB HD on an imac. The Touch is in another room connected via coax digital to my Anthem MRX.
I also setup Squeezeplayer and the SB server on my Macbook, so I can play the music on the HD on it to the Touch or listen to either source on the Macbook.
The ipeng app for the ipad is a great way to control it all.
As soon as I upgrade to Snow Leopard, I'm going to try Audirvana on the Macbook, considering getting a Audioquest Dragonfly to use with headphones.