Optical Digital Interface - Good or Bad?

I want to interface with my computer via the Logitech Duet so I can experience "PC Audio." However, I will keep my CD/DVD player hooked up to my DAC and I don't want to compromise that interface (via the digital coax). I'm not really familiar with any of the music servers on the market, but I assume I will need a physical interface between receiver and DAC (coax or optical). Since I want to keep the disc player connected via coax, I guess I would have to connect the Duet and DAC via the optical. Does the optical digital link degrade the signal compared with the coaxial digital link? What other options are there??