Can someone give Lossless Music File 101?

My setup is 'PC USB -> M-audio Transit -> Toslink -> Meridian 561M processor'. Trying to find best way(sound quality, easy of use, compatibility, etc) for using my PC as a CD player.

I might try itunes first

As far as sound quality goes, might look up some posts by Audioengr, I think he mods Transits to improve the clock, and I gather Transits take modding well. I personally dislike toslink, so you might get him to install a coax output instead too. ;)

Personally, I use a Waveterminal U24 USB audio device, but I gather from another thread that they discontinued them. :(

As far as the other parts, many will recommend foobar as a great player, and indeed it is. Unfortunately, foobar doesn't like Apple Lossless and I find the interface a bit non-intuitive. Apple does great UIs, so I'm sticking with iTunes.

What are Tags and what do they do?

Tags are defined in the file structure for certain information associated with the music data (usually a song). Standardized tags include Album, Artist, Genre, Track Number, Release Date, Album Art, Last Played, Rating, etc. Helps one organize music files...