micro atx or similar with a 1 u chassis. mount with stereo .
Run cat 5 to it from the switch. Done... RDP or ssh into it.
Currently I am pretty much doing what you are.
Computer next to stereo with a long spdif cable running into the DAC.
I looked into this a while ago, and they all supported only lossy music.
Flac was just starting to become supported but still not fully.
I think that has changed now, I have seen flac support pop up into a lot.
I have seen a system play shns before, (some kind of web jukebox)
I could never get it to work though. It required some custom scripting
that was beyond my knowledge.