no, no soundcard necessary the pc just streams a wav or mp3 over a tcp/ip network (or wireless or a crossover cable) - if you are using another compression system like flac the server transcodes the flac to either wav or mp3 (at your choice) and streams that.

the squeezebox recieves the stream and can either perform digital to analogue conversion and output an analogue signal to your preamp or it can output a standard spdif signal to an external dac. the squeezebox has a simple remote control interface allowing you to play albums / playlists / individual songs and browse / search your music library in a variety of ways.

cheers

julian