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RE: "A soundcard puts the DAC inside the computer" - only if you choose to do so.

Feeding the digital audio from a computer to an external DAC creates two problems that need to be solved. They can be addressed, but only by throwing money at them:

a) The computer itself is a huge source of RFI pollution. The best thing you can do with regards to your audio system is provide galvanic isolation between the it and your computer. You can do this easily with a TosLink connection, but only at the expense of adding jitter. Other methods are possible, but add to the cost.

b) Using a soundcard to create an S/PDIF signal to send to an external DAC is a sub-optimal solution. The external DAC must regenerate a clock based on the timing of the S/PDIF frame headers. This will always have higher jitter than using a *generated* clock that, in turn, controls the rate at which the computer sends audio data. Wavelength Audio has solved this problem for USB, and there are a handful of other companies that have solved this for Ethernet. One of these solutions will give much better jitter performance than using S/PDIF.

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