XFi is Creative's newest chipset after the Audigy2 series. It's overhyped, undersupported, and poorly implemented in Vista64, which is arguably the best OS to use for HTPC stuff.
If he's doing lossless, he better know what the source of the rips was, like I said. Lossless, unless you ripped things yourself, means nothing. Anyone can re-encode MP3s as lossless FLACs for the sake of having "lossless" files. I've seen this plenty of times, when my own lossless rips have far higher freq ranges than the lossless rips I saw posted on usenet.
The ONLY way to guarantee a best quality lossless encode is to encode the original source material yourself.