Logitech Squeezebox sound compared to CD Player

I think a good external dac would make a huge difference. Neither system I heard fit that bill.

I own both the Denon universal player that you own and the SBT.
The Denon is better and of course you cannot play sacd or DVD-a on the SBT. The SBT is still a great value but it does sound just slightly veiled when used with the same Dac that I use with the 2930 for reb book cd.

I'm not familiar with your Denon player, but I have a Rotel RCD1072, used to retail at $800 and was talked highly for its price, and a Touch. I use the analog outs of both into my Lamm LL2 pre and Mc MC275 amp, and B&W 804S speakers. Certainly not a super-system, but decent for many people.

When playing a ripped CD using dBpoweramp and lossless settings vs playing the same cd on the Rotel, I cannot hear any difference. Then of course I can play 24/96 material on the Touch which sounds great, but cannot compare to the Rotel. Suffice to say since purchasing the Touch this January I have not been using the Rotel and likely to sell it.

Next step is the outboard DAC, as noted here before. Note that besides the mods mentioned, there is a free set of mods you can do (settings, software) supplied by member Soundcheck. Haven't tried them, but people report significant improvements.

Go for it!!
:-)

The Logitech is veiled. I love it, but compared to my other digital sources, it has a blanket over it.

I highly recommend installing SoundCheck's software mod and his recommendation of using a linear power supply and ethernet cable. His mod disables the wireless which aides in improving the sound. On his blog, he a has very detailed step by step instructions on how to install. Take no longer than 10-20min to get installed.

The veiled sound people say is the stock sound. The SoundCheck software mod and disabling wireless gets rid of the veiled sound. There is still debate about the linear power supply. In my system, it made a difference. I was getting clicking sounds from the switching power supply that came with the SBT.

Even after the mods are installed, you can still tweak to your liking such as the buffer and SPDIF process priority. If you read the Logitech SBT forum, there are some good suggestions. Again, in my system, just changing the buffer value from 3400 to 4000 made the mid-range fill more solid (3D) and more warmth and texture to the instruments. The default 3400 made my system very smooth silky like, but lost a little dynamics. Sorry for rambling, but as you can tell, there is a lot of flexibility in the SBT software & hardware. For the value and the convenience of being able to scan your entire library at your fingertips, you can't beat it.