Starting a computer based system

I recently began a similar journey. I am using a Squeezebox Touch and a Western Digital "Elements" hard drive as my server (I simply do not want to leave any of my networked computers running 24/7). The hard drive is dedicated - nothing else on it but music, no goofy partitions or bloatware, and it's a powered drive.
I use FreeRip to rip CDs to FLAC (set to level 8 for optimum quality) and dump the files into the hard drive. I also download 96/24 files from HDTracks and other sources.
I run a Blue Jeans Cable (Belden 1694A) digital coax from the SBT to my Maverick Audio TubeMagic D2 DAC. I also use the SBT's optical output with a glass TOSLINK cable; sounds pretty much the same as the coax.
I use the D2 DAC's tube pre-outs to my preamp.
Voila, musical excellence.
On two of my 'puters, I have MediaMonkey in case I want to listen to any of these files (I have saved all of the music in multiple drives..."belt & suspenders" approach, you know?).
Keep us posted as you progress.

77jovian, the Squeezebox Touch has an internal server (I think it is called TinySB) that works very well with a powered external hard drive (can't use a USB-powered drive; the bus on the Touch does not output sufficient voltage to drive a big ol' 3.5" disc). Some folks have had issues with this configuration, but not I. The key is to ensure that your hard drive has no partitions or bloatware on it; format it (i.e. strip it down) and then put one folder with music files on it. When connected, the Touch will install it's own driver, scan the folder, and you're off the the races.