severe limiting factor

I think you stll need to work on speaker placement....
even systems that the components are mid fi can create stage and some depth, maybe not the ultimate in these areas but some. I think your equipment has the means to produce the things you want and do it very well. Also your room plays a bigger role than you might think and often a mid fi system can sound great in a good room, but a high end system can sound like crap in a bad room. As for the CD player, it is holding your system back but I think it's more the speaker Placement and your room than CD player. Happy Listening!

Ketchup, You also need to get them farther away from the back wall, I think 2.5 feet is too close, try 3.5 - 4 feet from back wall, 4 feet is better. 6.5 feet apart and no more than 7 feet from speaker to listener. Toe them in slightly but have the center of your tweeter fire to the outside of your ears. You need to address the first reflection as mention above and try something on the wall behind the speakers too. One last thing, do make sure they are wired correctly!

Newbee, I agree the room is to small or the speakers are too big, what ever way you want to look at it. Since Ketchup's current speaker setup isn't working, I think he should explore all possible setups first as this cost no $$ and if this fails then perhaps a speaker change or room renovation may be needed! (just kidding on the room renovation) I do beleive pulling speakers at least four feet out into the room should improve them and as far as distance from listener to speakers, well this will be a bit more of a challenge. Ketchup, your speakers are not the best match for your room but I really do think you can get some more out of them. may not be 100% of what your looking for but I think alot better. If you choose to spend a bit more time on speaker placement let us know how it works out.