With the pi you could run openELEC, a special built version of XBMC to be run on embedded devices. It'll happily take a USB HDD, and I assume (but have not tried) a USB cd rom drive. XBMC will rip CDs to FLAC, and can be set to do so automatically when a CD is popped in.
As for the touchscreen, I think you'd be SOL but there are plenty of other methods of control that could be used. On the DAC, you'd need to have one that accepted HDMI as openELEC for the pi does NOT support USB sound devices.
Setting up openELEC on the pi is not a very difficult task at all, but would come with the limitations I've listed. You could install linux on it but as BSA said above, it would be a challenge to get it to do everything you wanted.