well, it might in fact be a lossless file, but if you convert an already poor quality rip into apple lossless, it will still sound poor.
now that itunes is set up to default to lossless, you can re-add your cds in lossless. It sounds like maybe when you initially added them, you were set up to add them in acc.
You will only use the right click-convert to apple lossless option if there are wav files in your library. Wav is lossless so when it is converted to apple lossless, it is just making smaller files, but keeping them lossless.
Oh boy i think i just really confused you, sorry. Hopefully someone will jump in and help clear this up for you