Best PC and DAC Combo $700-ish

Right now, I have a Dell PC with a mediocre sound card hooked up to a Klipsch 2.1 speaker system. It sounds, you know...fine.

But recently, I've been reading a lot about DACs that are specific to PC's (Icon, Foobar, etc.) and newer speaker systems that could yield better sound.

I don't *need* a subwoofer, but I like the idea of the music at least getting down into the 35 Hz range, so that most likely includes a sub.

Can someone suggest a combination DAC/speaker setup that would work well with iTunes (Apple Lossless for virtually all 5,000 songs).

Blue Circle USB Thingee with Audioengine A5, Nuforce Icon with the new S-1 speaker.
I am (as I type) listening to a very nice desktop systems as follows:

NuForce iCon
NuForce S-1 Speakers
Benchmark USB DAC
Crystal Cables
iTunes from my PC..

Excellent desktop for the office!
Thanks for the help, guys. I decided to go with a NuForce Icon and a pair of M-Audio Studiophile BX8a Deluxe speakers on sale at Amazon. Taken altogether, about $625 shipped. It's all on its way...hopefully I'll be happy.