Playing flac files on my Mac book

I want to use my Mac book as a music server to take advantage of the spdif to optical input on my dac. 

I transfered all my flac files to the mac into a folder. I have tried VLC and Windows Media but the sound quality is very poor and highly distorted sounding.

I have gone to quite a bit of effort and expense to update this Mac but am very dissapointed. 

Where have I gone wrong. 

Thanks for any help you can offer.