Help a Newbie

I don't want to seem rude, but a decent explanation of what is going on in digital requires way more typing than is customary in these forums. Go to Amazon and order the book:

The Complete Guide to High-End Audio
by Robert Harley, Keith Jarrett.

It will cover enough for you to understand this forum. BTW dCS and MSB are manufacturers of digital audio equipment.

DTS "D.igital T.heatre S.ound" This is the highest quality audio encoding you can get on a DVD(up to 6.1 discrete channels). Digital Transport - This is like a CD or DVD player with a digital output only. From the digital output of the transport you would run the signal into a DAC- D.igital A.nalog C.onverter. However most basic cd players will have the DAC built in allowing for an analog output signal.SACD is a type of encoding for CD's kind of like DTS except for stereo music. In a high end system it may look like this.
CD TRANSPORT(SACD COMPATABLE) - D/A CONVERTER (DAC) - PREAMP (Don't ask) - AMP - SPEAKERS - With component cables inbetween the components and speaker cables from the amp to the speakers. Note that you will use a single digital cable between the transport and the dac then two analog cables (STEREO) through the rest of the system.

This is the beginner link, and we are all trying to understand. Try searching the digital forum using the newly revamped search feature.

I agree with Plsl, Robert Harley's book is a good place to start. What follows are generalizations and simplifications. But they may help you.
Think of the CD Player as composed of two, or perhaps three, parts. The part that spins the CD and reads the information stored on the disc is the transport. The part that translates that information into analog signals is the Digital to Analog Converter (DAC). CD Players combine these elements into a single box unit. If the CD Player has a digital output i.e. toslink (optical) or coaxial (RCA) you can add an external DAC; effectively turning the CD player into a transport and bypassing its internal DAC. Some manufacturers sell these units separately; some go even further and separate the power supply into a third unit.
The information on a CD is organized according to an agreed upon standard. Recently, Sony has introduced a new standard called SACD. Their competitors (namely everyone else) also introduced a new standard called DVD-Audio (DVD-A) (though this standard applies to DVDs not CDs). Both purport significant improvement in sound reproduction over the old CD standard and, of course, each other. Older CD Players/DVD Players/Transports/DACs are not compatible with the new standards; at least not without upgrades or modification.
This same process of analogy can be applied to preamplifiers, power amplifiers, and tuners. Some might call this heresy, but think of them as a receiver that has been broken apart. The preamplifier is essentially the command center - the place where most of your source components e.g. cd players and tuners are plugged into. It is kind of like a switch box (ok, ok, I know, I'm being overly simplistic). The analog output of the preamplifier is connected to the input of the power amplifier. The power amplifier is where the speakers are connected. It amplifies the signal provided by the preamplifier.
Why do people go for this complicated mess? Well, its really not so complicated. And, with patience and research you can build a system that is *far* superior to any receiver.
Well, I hope this helped more than confused. And I hope that the more technically inclined will forgive my gross generalizations.

I really do understand more after reading Galliane's and Glen's helpful comments. I will look for Plsl's recommended book as well as J Thunders search recommendations. I love this forum as well as this hobby! Thanks again!

Think VINYL...it's a lot easier! Good luck with the newbie stuff.