Some tips I have picked up for optimising sound quality of streamed audio over the last few months, some of them may be pretty obvious but Im going to put them down fr the sake of completeness.
Source material, high bit rate comprsses audio is not bad but Lossless is best, how much better will depend on your system but there is a difference.
If you are playing your music back via a computer turn off all audio processing, room effect EQ etc, specifically for iTunes turn off Sound check and sound enhancer.
If playing back via PC make sure your sound card is set up to be the same as the source material you are playing if you ripped a CD this will be 44.1 kHz & 16 Bit. If you have anything else set the sound card will be re-clocking the digital stream and creating bit errors.
If you are using an external DAC to feed in to an amp make sure that your source volume is at 100%, this means iTunes volume and the PC master volume if you are using the digital out from a streaming device to a DAC the same applies, any volume adjustment is done in the digital domain, reducing volume in the digital domain hotmail generally is done by reducing resolution, I.e. Going from 16 bits to 8 bits this is not good. There are some exeptions but they are generally high end kit.
Playing back iTunes from a PC specifically in order to get bit perfect audio playback you need to open up Quick Time go to Preferences and in the audio tab select Windows Audio Session, I am not a PC expert but it bypasses some of the windows internal processing.
Ripping audio with iTunes again make sure in the ripping options (Import Settings) that you have ticked the box for Use Error Correction, it may take a little longer but Rips will be better.