For the time being I'm using the Touch with factory settings, thru wi-fi, supplied power supply, etc. Just volume at 100% and use the preamp volume. The mods are in my to-do list. I'm using the internal DAC too (DAC is also in my to-do).
Ripping wasn't hard at all. Use the computer audiophile guide to ripping, follow step by step, and you are good to go without guessing what's a good approach. It suggests dBPoweramp. It is time consuming, but you can rip as you do other stuff so it wasn't bothersome to me.