So uploading the songs from the CD to the CD player's memory so that its DAC can work or sending it to the digital output is making an illegal copy?

Here is a more comprehensive article on the issue:

http://www.washingtonpost.com/wp-dyn...l?hpid=topnews

The target of the lawsuit is alleged to have made the songs available on a file sharing network.

The RIAA also claims that making copies to his computer for his own use is illegal but it is not established in law as the article above points out. It's possible that it will turn out to be legal.

More info:

http://en.wikipedia.org/wiki/Ripping...ems_and_status