With an SB1, apple lossless is transcoded to WAV/AIFF. The sb1 also has a small buffer (less than 1s) so any network delays can cause hiccups, especially if used over wireless. Some users have no problem (I was one of those), others had trouble getting it to work. It was probably part of the motive behind the much larger buffer in the SB2 and the use of FLAC. There was a hope that SB1 would get flac support, but the investigation into it showed that the CPU in the SB1 wasn't up to the task. Hence, SB2/3 uses a much more powerful cpu.
One help for SB1 wireless is to use bitrate limiting, set at 320. Unfortunately, this means mp3.
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