Ken,
(Caleb, please make any corrections) We ensured:
1- sub was 6 to 12 inches of the wall, had a crossover of 80, was between 9 and 12 (clock analogy) on the loudness side
2- played in 2 channel mode with all bass and treble flat
3- that there were no crossed polarities
While this sounds simple, I was only playing in 5 channel mode and since the receiver couldn't correctly power the speakers I was adjusting the bass, treble, and sub to try and compensate. Then when I'd flip to 2 channel it sounded worse.
We also assumed that 5 channel would not work with that receiver (60 watts per channel) and only played 2 channel (after we fixed it).
Since 2 channel sounded OK; that gave me some hope with the speakers so I purchased the Denon AVR 3806 receiver. I used the auto set up and room eq. for 6 spots. I have the bass set to LFE and main. I'm typically playing in 5 channel with audessy (sp) room eq. It sounds awesome; the channel separation is amazing.
For movies, if DTS available, I'm using DTS in straight 5 channel sound. I've used night mode, it seems to work OK. Movies also sound great.
As a side note, I've read tons of reviews on this receiver being very difficult to set up. THIS IS TRUE! UNLESS you connect a monitor to the receiver; you can then see the entire set up menu (versus 2 lines of it on the receiver display) and following it is much easier. You even get graphical displays of some of the settings.
Hope this helps,
Tom