to my mind the main challenges for an external dac are...

1) recieving the digital signal correctly (reducing jitter etc.)

2) converting the digital signal to an analogue one

3) filtering out any etraneous noise produced by 1 + 2

4) outputting this to a power amp.

1 and 2 are usually the focus of 'why digital sounds kak' with jitter being the main bogey man. however as oedipus says these have prety much been sorted out with common jitter measurements below 100ps (and believe me a picosecond is small) and dacs with fantastic measurements that designers from the 80's could only dream about.

3 is getting there however it's a personal choice as to what filtering you prefer - there are so many schemes that many dacs allow this to be altered to tweak the sound.

4 at present this is pretty much ignored other than to say it could be tube or solid state and maybe has some neat power regulation next big thing in digital?

one of the main differences between analogue and digital is that analogue has a large mechanical component where things like motors have to be constant torque and bearings have to be smooth, belt drives can;t slip, and arms need to be engineered to nasa stanards. basicly there's a whole lot more to go wrong with vinyl than with cd.