I don't see how an analogue problem could be responsible, because WAV sounded good and FLAC didn't. They both would go through the same analogue chain. A difference between WAV and FLAC could be because of one of two things... 1) CPU not being able to keep up with decoding the FLAC or 2) expectation bias. If the difference is huge glitches, it's most likely the former. If it's a more subtle difference, it's probably the latter.