AARK,

Good responses.

My $.02

1) As for data loss,
To get technical,

Two scenarios:
sound card without digital i/o -
ATRAC (digital format, proprietary MD format) to Analog signal to WAV file (digital format, standard PC sound file format.)

sound card with digital i/o -
ATRAC (digital) to WAV (digital)

Note that no matter what route you take you retain the ATRAC to WAV conversion.
It is my understanding that ATRAC is a "lossy" format (like MP3) but WAV isn't. So the conversion from the former to the latter should involve no loss.
The conversion from ATRAC to analog might change the sound you hear depending upon the algorithm, but it wouldn't necessarily be any sort of "loss".

Lots of people have opinions based upon theoretical considerations of formats and conversions, but the proof should be in the listening. I used analog tape for years until a friend purchased his first minidisc recorder. To hear his results was to be instantly converted.

2) As for "remove(ing) unwanted background noise",
Well, yes it is possible. But no amount of diddling with the WAV file will really make up for a bad MD recording. It is the old principle of garbage in garbage out. The MD will quite faithfully record exactly what you hear. The idea is to make sure you are hearing what you will want to hear when you do the recording.

3)My program of choice Sound Forge Studio. Wouldn't hesitate to recommend it.