You have to use a DAC to listen to digital music - Digital Analog Converter - your headphones/speakers require an analog signal.
The question you have to ask is which equipment has the best DAC?
It's extremely unlikely to be your PC, so streaming digital to either X5 or HiFi and allowing them to do the conversion will result in superior sound.
Only you will know whether the DAC in X5 is better than the DAC in your HiFi amp - you can compare by using line out (X5's DAC) or coax out (Hifi's DAC) and seeing which you prefer.
Thanks - that's good information. However, since I have almost all the same music on my X5, and on my PC...connecting my X5 directly to my home system vs. connecting PC to X5 as DAC, and then through home system - probably won't make much difference....right?