I have been studying this for a few months and there are several approaches. Finished products such as Gordon Rankin's Wavelength products, less expensive but possibly as good stuff from Scott Nixon, or the kit approach. Google DDDAC for an example.
I am presently using a Scott Nixon USB DAC (modified by me by replacing the output caps with some I like much better and running it from a battery supply) and couldn't be happier with the results. My previous player was a Naim CDX-2 ($5,000) and I have no regrets.
I see no reason to get a converter to go from USB to spdif and then feed that to a conventional DAC as there are one box devices. Some use oversampling so that is something to consider. The Nixon DAC as well as others have basically 2 chips, the USB receiver fed to a DAC chip. Some also use a single chip, a USB receiver that also ouputs analog but all of these oversample so I personally would stay away.
I bought a Mac Mini as my server with storage on redundant firewire drives and it is a cheap (relatively) and very simple solution. I tried it on a Windows system but it becomes very complicated, the best ripper is a clunky third party program that is difficult to set up and use and the best players are even worse as well as having to use additional plug in programs to bypass the Windows kmixer digital handling that screws up the sound. The Apple Mini is simple and has a remote to control your music library