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Budapest to Cesky Krumlov

If traveling by night train is the best way to get from Budapest to Cesky Krumlov to take the night train to Prague and then a train or bus to Cesky Krumlov?

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Depends on how much time and how many of you there are. You might consider taking the train to Eastern Czech Republic and pick up a car. And drive to Cesky Krumlov. Lot of interesting little towns to stop in along the way. Then return the car in Prague.
(it is a lot easier to pick a car and return it in the same country.) You also might think about a night in Bratislava on the way there. if you are traveling by yourself, a car would not make much economic sense.