For anyone interested in a portable player with a digital out, have a look at an iriver H120/H140. It has an optical digital output but it can be modified to a coax digital out (still bit-perfect).
I did that mod:
http://www.head-fi.org/t/497818/poll-who-uses-an-iriver-h1x0-with-digital-out/15#post_6998208
I am very happy of the result. The sound is clean and very detailed. (I am not audiophile enough to give you a detailed review)
With the Rockbox firmware it can read FLAC.
The only limitation is that it can't output 24/96, the best it can do is 16/44
You will have to look on ebay to find one of these things. I got mine for £70 ($110)
I use a small mini stereo (iriver) to mini trrs cable (jh3a)
Before buying it I thought about other options:
- a QLS QA-550
http://qlshifi.com/en/wzcapi/qa550.htm
I actually bought one.
+ Bit-perfect output
- Read only wav
- no internal battery (you can use an external 9v battery or a charger)
- UI very limited
- Too big for me
Another model, the QA-350, has an internal battery and a better UI.
- a Cowon D3. It has a cable (sold separately) with a coax digital output. However it is not bit perfect. I read on a french forum that you can change the volume of the digital output (therefore not bit-perect) and there is a bit of background noise. I haven't seen another similar report but the guy knew what he was doing because he also has an iriver H140 and a Cowon Q5 and he did notice the differences.
- a Cowon Q5. I think it uses a cable like the Cowon D3. The Q5 seems very hard to find on ebay so I did not investigate more.
- a Viliv S5. It is a UMPC with Windows XP or Seven. It has a usb port so my idea was to use it with a M2Tech Hiface. It is not easy to find but there are some on Yahoo Auction Japan. I was going to use a service like easyauctionjapan.com but I back off as the Viliv was too big for me.