Storing DSD/PCM files and playing through a DAC

The type of drive will depend largely on the size of your library, but in general, any drive will be fast enough, but SSD has faster access times and no moving parts so they emit no mechanical noise.

USB 2.0 will be fast enough.

If you want to put your music on a thumb drive and put it on the back of your Oppo go ahead.
Personally I use Roon and it plays DSD /DSF files just fine, either directly or by converting to PCM when needed.

HDDs are the 'value' choice with an emphasis upon Pro / Server Class 
drives.
A network based solution (NAS / Server) would allow for Large Capacity
independent source for all your Audio and Personal Back Up needs.
A small Home Server ($300-$500 plus HDDs) on a Home Network
centralizes your files and does not limit access to any one PC / Mac.
A dedicated Renderer / Transport could be used rather than a PC.
Apps like Plex, Bubble UPnP can be used to control playback.

@erik_squires,That was my thought about SSD and NVMe. Silent, but slightly pricey, which in the long run is fine.How do you like the Roon's sound quality? Based on your suggestion I did look at Roon and found that this might be something I would be interested. In fact the Oppo UDP-205 is Roon enabled. Does it mean that if I connect a SSD to the Oppo, I will be able to control it through the Roon app directly?

@rego,I can have a NAS connected to my Router and I do have a hardwired connection in my audio room, if I need to connect the network cable to the Oppo or an external DAC.I have downloaded the Bubble UPnP on my android tablet. I will explore more on how to play music through a HDD that I can connect directly to the router. Does it mean that my Oppo/DAC becomes the renderer and the source would be the HDD?

A Renderer would interface between the local source Server and the DAC or in place of a computer.
An example would be the Roon Nucleus (Roon Based) instead of a computer.
White Paper here: https://docs.google.com/document/d/1pUj-yFsAHPgTuV1TbcESA4va1_mxv1M_VQPJV___nuQ/edit
The Nucleus is a good example of a dedicated digital transport with no
redundant features.
A Local Server will add flexibility and utility and not be dependent upon the differences between PCs and Macs (Files and Format) as well as being able to physically handle storage drives.
A two bay Server starting at $500 +/- including drives (4-6TB) will be powerful enough and redundant Back Up with Mirrored drives.
All components would be Plug N Play apart from setting up a Server.
A portable HDD would be more compatibility dependent and more vulnerable to damage.
Oppo states Roon Ready for the 203-205 series.
Look here for Oppo info: http://help.nativedsd.com/en/articles/94445-playing-dsd-on-oppo-machines-explained
It seems that a network device is accessible with Roon.
If you would output to a separate DAC then the Oppo is a Digital Transport / Renderer (as a Roon Endpoint). 
My 203 is typically used for BluRay and CD playback  >>> Coax >>> Integrated for Audio.