Quote Originally Posted by cgibsong002

2) what is a DAC and why do i need it?

Digital to Analog Convertor, does just what it says. Will take your computers digital signal and convert it to something your stereo can understand.

3) i'm kind of hesitant to go for a regular computer speaker system. they seem to be fairly limited in upgradeability and if they break you're kinda out of luck.

Yep, I think a computer speaker system is a horrible idea.

4) those audio engine speakers look good, i don't need an amp (correct?) and i can always add the sub later. but for around the same price i can rebuild my polks. will the polks be better quality or is it just a better idea to get the audio engines?

Listen, are you experienced at re-building speakers? To make them sound good it'll take some work. They need to be refoamed as well. I bet for $100 you could get a serious pair of used bookshelfs that could easily contend with the Polks.

as far as money and space, its more of a limit i'm putting on myself. i've get much more than my $200 budget, but i'd rather start with something that will be better than i have with the option of upgradeability. space is a minor concern for now, but next year i'll have my own room in a house, and either way i doubt i'll be getting a sub so big i can't fit it in my dorm anyway.

Right, space shouldn't be an issue. It can be done for cheap.

and again i'm not trying to disregard all of your opinions. that was just a ****load of info and i'm just trying to understand everything and make sure i'm making the right choice.
also, i'm typically an ebay/craigslist scavenger so i have no problem going used, i just don't know where to start.

Start with one source/component and have the good people of Audio review help you. You will learn as you go and be better off for it. If it's an amp you want to start with, go to the amp section and post away.
Don't stress man, you have lots of help here!