the ultimate set up

1. how powerful must my PC be?

If you are doing USB or Firewire, then more Ghz is better and bigger RAM. If you are doing networked, ala Squeezebox, Sonos, Duet, then it does not matter.

2. what ripping software should I use?

EAC for PC, iTunes for Mac

3. what type of hard drive do I need - would a flash memory get rid of jitter?

Flash memory can be helpful for USB, Firewire or direct S/PDIF interfaces. No difference for networked (SB3)

4. when outputting should I use a soundcard, or an outboard dac and if so which one?

Use an outboard device, either USB/Firewire converter or DAC or a WiFi networked device.

5. should i invest in a streamer so that I can put my pc in another room and reduce noise further - again which one - squeezebox duet - the modwright modified one, or the new one from chord or resolution audio

All of the "streamers" as you call them use inferior clocks, power supplies and inferior CODEC chips in them. No amount of mods will fix the jitter caused by these IMO, just improve on it. It takes some type of reclocker to fix it right.

Steve N.
Empirical Audio

Steve is an expert on this subject.

for other info on this subject from an audiopile point of view i suggest visiting the 'PC' forum on audioasylum.com. there you can do a search for lots of things and find other informed people who can answer these questions.

this is also a moving target right now with lots of new alternatives particularly regarding digital archiveing formats better than 44/16.

good luck.