cd carousel for hard drive cd archive

No, you really need a CD ROM drive, not an audio CD player--the optical s/pdif output is not the same as the IDE or ATA CD ROM interface. There are carousel CD ROMs, used by libraries and such, but haven't seen them used in this type of application.

Absolutely not. For optimal sound quality, use a good CD rom drive and extract the audio files using EAC (Exact Audio Copy).

This could work

http://www.sonystyle.com/is-bin/INTERSHOP.enfinity/eCS/Store/en/-/USD/SY_BrowseCatalog-Start;sid=nDivWMPdpZqvS4AoP7ilU4zM2tf3_Zg4yS0=?CategoryName=cpu_DigitalLivingSystem&Dept=computers

First, I am always leery of "media center" systems. The quality of your digital music experience is directly related to how good the quality of your ripping and (if used) encoding. Poor ripping = poor sound. EAC is the ne-plus-ultra of ripping, and I wouldn't use anything else.

Second, I certainly don't trust Sony, which is a content provider, with giving me a ripper that duplicates--without addition or subtraction--content on a CD. This is the company that surreptiously installed extremely pernicious rootkits on CD buyer's computers without telling them.