OK, after further research, it looks like my Rotel RC1070 preamp does not have an optical input. In fact I don't think it even has an internal DAC. (I assume my CD player has the DAC?)

So, that means the Airport Express is doing the digital to analog conversion? Is that a capable DAC or should I be looking at upgrades? I assume that would require a DAC at each AE? probably not in the budget...

M60's Rotel Nad Music Hall MMF-5
M80's VP150 QS8's Sherwood Newcastle Panasonic Plasma
Algonquins