Making most out of my Dell PC for HTPC

Hey guys,

I have a Dell Studio Slim PC with a Blu Ray drive, and am looking to use it as my DVD player and music server. I know for sure that I'd be using the HDMI output from my PC into a higher end AV receiver. However, while I'll be using it for BD playback via 5.1, my main focus is in 2-channel playback of my iTunes library (all discs have been ripped in AIFF).

My main question is: if I were to get a higher end AVR, would there be a digital-to-analog conversion through the HDMI cable when I'm looking to strictly play 2-channel music, or does it just stay digital? Am I simply misunderstanding how AVRs work? I'm not so much worried about 5.1, cause I know it's gonna sound awesome either way, but when it comes to 2-channel, I want my music to sound as best as possible.

I have been looking into the Rotel RSX-1057, and despite it being really expensive, I feel it would be worth saving the money for. Would this be the right direction to go in? I don't see any information on digital-to-analog conversion in the product description though. Do you guys have other suggestions of AVRs to look into that might be more budget friendly but still sound as good as possible?

Not a single piece of advice? Am I thinking completely wrong?
I've been using my Dells this way for over two years now. Does your Dell have a coaxial or optical digital output? What are you using as playback software? Hopefully something other than Itunes.

Unless you have a video / sound card that passes both audio and video through HDMI. You'll still need a optical or digital coax output for sound.

If focused on two channel, a Dac fed by the PC into a analog preamp then amplifier would be a better option.

Or you could go with an all in one DAC, preamp, amplifier unit that has a digital pass through, so you could feed a separate AVR the rest of the channels.Your two channel music would only come from the all in one. You'd use the AVR when you wanted 5.1 sound or higher.

I have both coaxial digital output via S/PDIF, as well as 2 HDMI outputs (I got the upgraded video card). I have used Foobar2000 in the past, but it doesn't sound better than iTunes on Vista Ultimate...whereas Foobar2K did sound better on XP.
Have you tried J.River using the WASAPI plugin? It will play all formats and puts the rubber closer to the road than Itunes will on a PC.

So your video card will pass the audio/video over HDMI? Most will only pass video. If so this is great!

I haven't been keeping up much with the newest preamps that accept HDMI. I do see more and more AVRs, even the cheaper ones coming equipped with a full functioning HDMI input.

I've decided how I'm going to setup my system from here. I will still be using the PC for audio/Blu Ray playback, and I'm gonna try playing around with J.River, thank you for the suggestion.

System will be as follows (including preliminary ideas for equipment):

Dell Studio Slim --> Outboard DAC --> 2-Channel Amplifier (Emotiva XPA-2) --> Speakers (Paradigm Studio 100)

I imagine the best form of DAC to use is USB, but honestly I have a very hard time imagining spending ~$1,000 for just the DAC, when the freakin amplifier doesn't even cost that much. How much does the DAC improve things in actuality?

What I've realized is that for me, 2-channel is king, and with a solid 2-channel setup I imagine I'll be perfectly satisfied for the time being watching movies with that setup.

More suggestions, please, thank you!
A Dac makes a huge difference in sound. You don't need to spend a grand to get good sound from a Dac. There are many out there that will suit you well.

You can always extend the setup as needed.

So you plan to go from the Dac directly to an amplifier? Does the DAC have a built in volume control/ preamp.
For the intermediate time, yes, I will be going DAC straight to the amp. I'm figuring that for the time being, the PC would serve essentially as a preamp for volume control/audio adjustments. While that typically would be a pain in the ass, it will have to do until I can afford a solid preamp.

As for the DAC, I really don't know where to begin. It boggles my mind how some DACs can be so expensive, when they are essentially made of the same parts to do the same job. I guess that will come down to auditioning and comparing various makes/models (preferably via double-blind testing).