Audio Quality Argument

[RobinDean]

I'm hoping someone will end an argument I'm having (with myself) regarding the audio quality settings in Replay Music.

Note: I'm a studio recording artist by degree and have a savvy understanding of digital audio. However, I'm not a programmer so I have no idea about the methods in which this program makes use of my sound card.

When I record audio with Replay Music, I want to know that what I'm downloading is equal in bit-depth and khz to that which I'm hearing through my speakers.

My assumption is that if I choose to encode an incoming stream at 256k ... and the stream is already playing at 256k ... I'm actually RE-ENCODING it. So, my belief is that there's a loss of quality due to it being "double-encoded" (256kbps audio streaming in being re-encoded at 256kbps for a second time).

Because of my confusion over this, I insist on recording to WAV.

If I knew for a fact (and could trust) that the incoming stream is able to be saved at it's current bit-depth and khz without being encoded to .wav, I'd probably consider using the "auto" settings or whatever.

MY QUESTION:

What are the specs on this? How does it work? What settings should I use to maintain absolute, current quality of the incoming audio?

Thanks in advance!