G'day Jon,
My sound card is a Roland UA-100 which if you follow the link you'll see lives in its own case, away from the interference inside the PC case. For playback of wave files it has a much better spec than my CD player, e.g. 128 times oversampling. Most sound card specs don't even mention oversampling. They would if they had it. If you don't get the quality you expect from your sound card it probably is the D/A converter/low pass filter combination - especially the LPF. The other quality bottleneck in most computer sound systems is the louspeakers. Speakers sold for PC use seldom stack up well against REAL hi-fi speakers no matter what the hype might say. I use a pair of old hi-fi speakers in my computer room, plus I can switch the PC sound to my good hi-fi.

If you are "grabbing" tracks off CDs they should sound identical to the original played through the same amplifier/speaker combination. I assume you are grabbing using a CD extraction program thus bypassing any analogue stage. If the combination of grabber (or ripper) and CD drive is less than perfect (fairly common unless the drive is pretty new) you may have errors in the wave file, but these sound a bit like clicks on LPs, not what you've described which seems more like a cheap low pass filter.

You are right about the CD drive having its own D/A converter and LPF, but you still can't expect the quality of a good CD player.

If you don't have the processing power needed to play mp3 files (must be decoded on the fly) you would hear the sound break up as it fails to decode at the required rate.

I've used Sonique and liked it, it's very cute, but I've settled om Winamp as it has all the features I need such as easily converting mp3 to wave.

I've tried several encoders (wave to mp3) and found Plugger+ (search for it at www.mp3.com) to be very effective (and free). Others I've tried exhibit occasional quality problems. (Plugger probably does too, but I've never known it to). Plugger works like a DOS program but there is a Windows shell which makes it very easy to use. I'm at work now so I don't have a URL for it but I probably found it via mp3.com.

It's interesting to hear mp3 files with a quality problem. It's not the conventional type of degradation (frequency response, distortion, noise etc.), it is heard as a change in the sound characteristics of possibly one instrument only, always a quiet one (at least in my experience). For instance, the first time I heard an mp3 sound different from the original it was the quietly played treble strings on a guitar that sounded odd while the bass strings were played significantly louder and sounded unchanged.

Cheers,
Alan