Good DACs for Apple Airport Express? Or receivers?

I'm new to the digital audio world, although I've always hated MP3s and have ripped my CDs to lossless format.

However, naively I figured just setting up an Airport Express into my analog receiver would be the equivalent of playing a CD. Boy was I disappointed!

So doing some research, I now know that I need some kind of DAC connected via toslink optic cable to my receiver.

I'm hoping that people have some suggestions, especially something affordable, like under $300.

Also wondering, are there simple receivers with DACs in them that will do the same thing? I see someone on Craigslist selling a Denon 5700 for $350. Is this old flagship with DAC channels any good? I don't need a theater setup, but this seems like a good deal to a newbie.
You have the right idea. Get the best receiver you can afford that has an optical input, get a mini toslink optical cable and your iTunes will sound much better. At least you have ripped your CDs into Apple Lossless, good job. Make sure you turn off "sound check" and "sound enhancer"....and let the tunes flow. Keep me posted as to your progress.
I plan to run a similar setup for my office. I've spent countless hours looking and researching for some older quality gear that I can use for an inexpensive office system. My conclusion is that an older HT receiver is really quite a value when you consider that it will have a tuner, DAC, preamp, and amp. Another handy feature of a HT receiver that might be helpful is the built in crossover, usually at 80hz. I would think you should be able to find a variety of older quality HT receivers for $350 or less.

I believe Music Hall made a two channel receiver that included a built in DAC but it also will most likely be beyond your budget as well.

If you already have a decent receiver and speakers, then I think purchasing a DAC is a good idea. The Musical Fidelity V-Dac is a popular one that comes to mind that is within your budget although I've never heard it. I have a Monarchy Audio M22 that I really like but it might be a little beyond your stated budget.
Take a look at the Logitech Squeezebox Touch. While it may not be the ultimate in sound quality, it is the ultimate in convenience.
The older Sony ES receivers sound really good, and fit your budget. The STR DA 777ES, is probably their best sounding reciever.
grab that 5700; i used to own one. its a very good unit and its dacs are also very good; excellent starter. feed your ae via toslink as suggested; you will not be disappointed!
I've used a couple of inexpensive DAC's with an Airport Express, the Valab and the Beresford TC-7520 with the opamp upgrade. Both worked fine but the Beresford sounds much better to me than the Valab, has more flexibility and the build quality is much higher, for just a little more money.
Benchmark DAC1 will reject the jitter from your Airport Express. I would not put as much faith in older receivers at jitter rejection - although the difference will likely be small to most ears.
Shad is 100%.
Jitter from AE would seem to be an 'issue'. The difference is not, however, 'small'. The noise is like fingers on a chalkboard.
My CA840 HATES this combo....though when it plays, it is terrific. It just won't lock onto the AE signal, so every couple minutes it wigs out.

Good budget DAC? Maybe the CA DacMagic....but be sure you can return or just get a demo first......The noise made by mis clocking is awful.
What about the Pioneer VSX-29TX? Someone is interested in selling me his for $300. I read that it had some soldering problems but owner has confirmed that while he knew about that as well, he seems to be lucky in that after 9 years he still has no problems.
BTW, thanks everybody for responding to my first thread so quickly!
I've used the Airport Express with four DAC's, the Benchmark DAC1, the internal DAC in a Peachtree Decco, the Valab and the Beresford. I never had a problem with any of them locking onto the signal from either the Airport Express 802.11g or 802.11n models I've owned.
Cool. I hadn't head of the Beresford before. Pretty reasonably priced for what you get. Sfra, have you listened to the headphone output yet? How does it do with high impedence headphones (e.g. Sennheiser 600s)? Thanks.
The DAC in the Peachtree Decco is sweet. Proof that simple designs can offer excellent results.

I didn't know much about the Beresford, either, until I went into a local high-end audio store and had one of the salesmen tell me they had all been shocked at how good it was at the price. When he was clearly trying to steer me toward the Beresford rather than any of the pricier DAC's they stock I decided I ought to pay attention.

I went for the model with National Semiconductor LM4562NA opamps, which is $350, because I'd had good experience upgrading opamps in CD players. The 30-day trial period makes it so that there's not a lot of risk.

I own the Sennheiser 600's myself, and the Beresford drives them very easily. I haven't done much listening to the headphone output and don't have anything else to compare it to now but as part of the overall package I think it's a great bargain. It works well and sounds good.