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Try this combo:
Front Channel: Yamaha NS-6390 $100/pair
Center Channel: JBL N-Center $150
Surround Speakers: Yamaha NS-5390 $80/pair
Subwoofer: Yamaha SW-105 $150
Reciever: Yamaha HTR-5540 $300
Total --- $780.00
I realize that this is a Yamaha biased reccommendation, but they make really good stuff at reasonable prices. I myself have Yamaha surrounds and a Yamaha sub and will soon purchase a new reciever from Yamaha.
These prices are Best Buy prices which can easily be beaten on ebay or any online store carrying these items. If you price shop these items, you should have enough left over to get speaker stands for the front channels and good wiring for all of the speakers. NEVER UNDERESTIMATE THE VALUE OF GOOD WIRING!!! It can make a huge difference.
The Onkyo you were looking at is a great reciever, but I feel you would get more bang for your buck with the Yamaha...particularly if you have a bunch of stuff to hook up.
I hope this post helps. If you want any more advise just ask.
Sig Z 314
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P.S. Optical or Coax...hardly any different. I would go with optical...it won't pick up RF interference and more components have an optical out.
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