ExactAudioCopy ripping software

600 MB or so for a single uncompressed CD (WAV or AIFF format), and about half that if you use a lossless compression scheme such as FLAC, WMA Lossless or Apple Lossless.

Apple Airport Express and Slim Devices Squeezebox both have analog and digital outputs so the results depend on how you use them. I can't speak for quality of the Airport digital out, but the Squeezebox SPDIF output quality is excellent, and improved even further with some simple modifications. Using the digital output, the sound is pretty much determined entirely by the quality of external DAC you choose to use.

Fatparrot: There is no loss when decoding an encrypted FLAC, Apple Lossless, or WMA lossless file. I'm sure there is some way to prove this mathematically, but empirically folks have encoded literally millions of music files in these formats and there has been no published instance that I know of where a file did not decode correctly when the software worked properly. That is certainly enough experimental evidence for me to believe the lossless claims.

Some folks claim to have heard differences between FLAC encoded and WAV (unencoded) files on some systems, but given the subjective nature of audio it's hard to know if this is a real or imagined difference. There is some thought that the processing required for decoding may effect the overall audio chain and introduce some difference if it sufficiently taxes the system, but all of the algorithms I mentioned require very little processing to decode. On a PC or Mac where computing power is in abundance, it's not likely that there would be any effect. On a Squeezebox or Airport Express unit where the processor is significantly smaller there may be a possibility, although it's hard to imagine how it might occur. I have a Squeezebox and have it set up to decode my FLAC files on the PC first and then stream PCM (WAV), and I hear no difference between the FLAC files and the original WAV files from the CD.

Note that none of the things I mentioned are due to incorrect decoding of the files. Lossless means just that and the only difference between an encoded file and the original WAV (or AIFF) image is size and the ability to store tags information.

Herman: There are a number of folks providing mods for the Squeezebox 2 and 3 but the two I hear about most are by Boulder Cable and Red Wine Audio. Both of them have internal modifications for both the digital and analog outputs, plus an enhanced external power supply which is reputed to make a significant difference. Many folks have reported improvements by simply swapping out the stock switching PSU with an inexpensive linear one. If your interested in details, you might want to take a look at the Slim Devices audiophile forums. There have been many discussions about the various mods and their effects.