I think that the "gap-less" playing of the files from atrac wil be lost while converting to other formats (except wav).
You can get gapless playback of MP3's if you're willing to do some extra work. Encode the entire album as a single MP3 with a constant bit rate (VBR will mess up the seek offsets). Then create a .m3u file that lists the start/end times (in seconds) of each track in the MP3 file, like this:
#More Than a Feeling
/dos/data/music/Boston_Boston.mp3 0 285
#Peace of Mind
/dos/data/music/Boston_Boston.mp3 283 587
#Foreplay/Long Time
/dos/data/music/Boston_Boston.mp3 585 1054
#Rock & Roll Band
/dos/data/music/Boston_Boston.mp3 1052 1235
#Smokin'
/dos/data/music/Boston_Boston.mp3 1233 1497
#Hitch a Ride
/dos/data/music/Boston_Boston.mp3 1495 1748
#Something About You
/dos/data/music/Boston_Boston.mp3 1746 1976
#Let Me Take You Home Tonight
/dos/data/music/Boston_Boston.mp3 1974 -1
When playing the album straight through, it will be completely gapless without needed any cross-fade hacks. When seeking to a track within the album, a little "slop" is programmed in because lots of older albums had 2 seconds of silence between tracks. In a perfect world, we'd always land in the silent spot when seeking. In practice, it isn't perfect because MP3s are counted by frames, while the Phatbox only has a resolution of 1 second. But it usually works fine.
There a number of non-obvious things you need to do to get this to work if you manage the DMS with PMM (either Music or Media version). If anybody's actually interested, I'll write it up.