What do I need to set up digital music server?

"4) good USB cable to go to a USB DAC or USB converter - $450"

Steve,

Why so much for the USB cable? You don't have to sell me on the benefits of using good cables, but $450 seems a bit high when looking at the cost of the other components you recommend.

Winggo, yes you are getting closer! Be advised though that you should not have all your digital audio files in only one place. Keeping two copies in two different places is highly recommended by everyone. When I use my laptop's internal CD drive to rip a CD using dBpoweramp, I rip a FLAC copy to my laptop's harddrive as well as a WAV copy to an external USB drive. This gives me a backup of everything if one or the other of these drives should fail.

As for the DAC, you don't want to rely on the DAC built into your laptop's soundcard (quality just not good enough) so you are correct to be thinking in terms of needing some other DAC as part of your solution.

As for the "digital music player" you just need to be sure that you have a workable way (be it USB cable, Ethernet cable, or WiFi) for the device that performs the playback function to access your audio files from wherever you've stored those files. And as you've already gleaned your solution also needs some kind of visual interface (often an iPad) that allows you to browse your audio files wherever you've stored them and select the ones that you want the "digital music player" component to play.

Right now I am using a Musical Fidelity V dac II. I am using my laptop as the source which is connected to the dac with a long USB cable running across the floor. I would like to get rid of all the clutter, and as I said, the PC leaves something to be desired as far as sound quality goes.

Sonos has a neat little unit that has a remote with a screen. I like the idea but I don't think the Sonos will handle HD files. Logitech also has the Sqeezebox Touch, but again not sure of the sound quality. Any opinions on these two products?

My laptop has a wireless connection to our modem. Is it possible for a server to also be wireless or does it neccessarily have to be hardwired for internet access? I would like the server to be able to access things like Pandora and also to be able to download music files direct from the internet.

Could someone explain more about this "clock" thing? It sounds like it is the heart of a digital system. Will a good DAC provide the "clock" or is it in the server?

I'm learning a little more everyday.

Winggo - Have you read my post?

Sonos does not support hi-res files which is indicated as the first objective in the OP. Logitech no longer makes Squeezebox (and hasn't for some time) so why get in bed with yesterday's news? As for "is it possible for a server to also be wireless" the word 'server' is probably not the best choice here, I think the word 'player' would be better, but in any case, the answer is yes.