Also I should point out I am using Squeezecenter 7.4 builds. It required new firmware for the SQ3.

It sounds similar to sending 24 bit and cutting it off some bits. The sound is flatter streaming FLAC. I should set my 518 to bypass or 24 bit input and see if it changes the sound when streaming FLAC instead of PCM. I assume it is sending 16 bit but maybe its not or maybe dither is set to the wrong level. It may just be somthing like dither making it sound different.

HT: 568.2mm (Revelation One filter), 518x2, SB3, Bryston 7BSTx3, 8BST, Aerial 10T, CC3, SW12(Qty2) w/SVS AS-EQ1, MK Tripole x4. JVC RS1u, DVDO Duo, Oppo 103 w/Vanity103HD, Sony PS3, VIP 3D Theatre, Acer H5360. Logitech Ultimate Remote and Hub.