High End system sounding Terrible????

I second all the great feedback you've received above. Check out the SUB and speaker configuration in the AVR300. The 'direct' mode sounds best as has been pointed out above. In addition (I owned an AVR300 shortly after it went on the market), I found the ARCAM sound to be very dynamic and resolving but far too bright as several people have pointed out above. I found it necessary to go into the System Trims/Adjustments menu and trim the overall Treble setting for the AVR300 by -2db. This improved both HT and 2-channel to the point where I could listen to it as my speakers at the time had ribbon super-tweeters and the 0db setting on the AVR300 resulted in ear fatigue to say the least.

If you want a more natural sounding HT surr/proc, try Sherbourn PT-7010a (a steal a low price), Outlaw, Anthem (D2) or Classe SSP-300 and SSP-600.

The best overall route as others have said is to have a separate 2-channel pre-amp for your music listening.

Have you considered a 2 channel tube buffer/preamp

I also have the Arcam 300 and Marantz CD, Panasonic DVD, with Monitor audio speakers. The Fi isn't Hi enough to be Hi end. I have a 2 channel system for music.