Sound recording software and USB DAC?

[paddyb]

Could somebody clarify something for me.

When using software like Replay Music, is it recording the sound after it has been processed by my PC's onboard DAC? So the original stream has been converted to analog by the DAC, then back to digital again by the software?

If this is so, then as the quality of most embedded soundcards is quite poor, could the results be improved by using an external USB DAC? Would Replay or other software be able to intercept the stream coming out of the external DAC rather than the PC's soundcard/chip?

I hope that makes sense?