Thinking about Laptop system - Newbie Questions


As an old timer (listening to 50% vinyl/50% CD), all this music server stuff is very new to me, but I am somewhat computer literate. I was thinking about building a nice little laptop based music server. Thinking about either a Logitech Transporter or Squeezebox Duet with separate DAC. I have a wireless router close enough to the 2 channel system so I can go either wireless or Ethernet.
Laptop is Toshiba with 4 Gb RAM, 340 Gb HD. I would use a stand-alone HD to store music.
So, I have a few questions: Transporter vs. Duet/DAC?
What format to store music? WAV, FLAC, etc.?
Can I still use the laptop while playing music?
Any other helpful hints?

Sorry for all the newbie questions. I am doing as much research as I can before I jump into this.

Thanks for any info.
smholl
Rakuennow- I like the suggestion of forgoing the Logitech devices, just using laptop and DAC. One problem I have is that where I use the laptop is across the room from the DAC. Would need to use a long cable. Also, my laptop has 3.5mm digital (optical) output. I could go Toslink into a DAC.
i am from the other camp and think highly of the logitech products as well as their interface. i use the sb duet to theta dac. i find very few hi rez music in my collection. it has changed the way i listen and enjoy music. as mentioned, back up your music! i lost one hard drive, fortunately it was a small portion of my music, 1000 songs or so.
another point...i have found zero difference in lossless formats or ripping tools. as a result, i chose the easiest to use which, as a pc user, is windows media player and windows media audio lossless files. many seem to think that eac and flac offer sonic benefits, i was unable to detect them in a very resolving system.
Richard - It would be much easier for my installation to use a SB Duet or Transporter. How is the sound quality of the SB Duet without DAC? Is it listenable until I get a DAC?
listenable is subjective. it is not a very good dac and i think most on this site would not find it listenable. the transporter is an all in one solution that includes a fine dac and clocking mechanism. there has been some threads here recently that discuss the additional benefits of the digital outs on the transporter (vs duet)as well. given what you have posted, that (transporter) would be my recomendation. full disclosure: i have a transporter listed but that has zero to do with my input. they are easy to sell so that has no bearing. good luck in your quest. it will be a real ear opener! it is an exciting time in audio.