Hard Drive based system

I posted this in the digital forum and got no responses.

I've read all of the threads I could find on a "server" type system. I plan on running a hard drive, to a Waveterminal, to a DAC. My question is, can a system like this sound as good, or better than, my cd player? Is it all up to the DAC? I want the convenience of a server, but not at the expense of sound quality.

I currently have a Marantz 8260 CD/SACD player.