1. The K-mixer that Windows uses can cause distortions (it tries to "modify" the signal like an equalizer and/or volume control) and has to be deactivated. Check into this:
http://www.benchmarkmedia.com/wiki/index.php/Windows_XP_Audio_Playback_-_Setup_Guide
2. The sourceforge chart is good to study. But in the end, a lossless file is a lossless file. Assuming it's been ripped without error, then you have a bitperfect file. So long as your playback software/device can decode it, you will get the same output with any lossless format.
3. Many people prefer iTunes and the Mac interface over PC, hence people heaping praise on the Mac approach. But I'm like you, I much prefer the PC platform and the variety of playback softwares I can use (Windows Media, WinAmp, MonkeyMedia, etc) as well as having access to services like Rhapsody. Take it a step further and use a Sonos or Squeezebox and you can eliminate a computer altogether.
If you are hearing a difference and you are sure that all your connections are equivalent, then you may not be getting a good rip when generating your files. Make sure the software you use has some form of "read until right" mode and use it. Yes, it slows things down considerably, but its important to get the data off the disk right. The best software historically has been Exact Audio Copy (EAC), which is free. It is, however, difficult to configure and temperamental if configured incorrectly. I use version 11.1 of Easy CD-DA extractor myself because it's ripping engine is on par with EAC and it supports FLAC 1.3 (includes album art in the file tag). Cost is about $20 U.S.
Yes, there are a lot of places where mistakes can be made in this process, but once you figure it out, you will love the convenience of file based audio. And with the right set-up, it can be equal or better than any disk based transport (DAC notwithstanding). Other than my SACD and DVD-A disks, I almost never use my universal player for listening to Redbook CDs anymore. And once someone figures how to rip and play those digitally, I won't use it there either.
Come back if you have more questions.