Quick Questions on Receivers

So, I'm planning on buying a receiver. The receiver in question, is the Sherwood RX-4109. It's a two-channel receiver, which means it only supports 2 speakers, correct? The thing is, I have a 5.1 surround sound system, where the 5 speakers connect to the subwoofer, and the subwoofer has all the RCA connections on the back. I was planning on just connecting my receiver to the surround sound system, but because the receiver is a stereo-receiver, would the audio being pumped into the surround sound system truly be "surround sound"? Like, say I connect my PS3 to the receiver, and in turn my surround sound system, then I play a movie that supports 5.1 audio; would the audio being played on the speakers truly be 5.1, or would the receiver somehow "convert" all the audio to 2.1?

The thing is, it's not connecting two receivers together. I have a "surround sound system" where 5 satellite speakers connect to a subwoofer, and on the back of that subwoofer is 1 RCA Aux-Input. If you really want to know the details, I bought this system in Asia, and it's main purpose is to be connected to a "Karaoke Amplifier/Karaoke Player". We have no such thing in the US, but in this part of the world where karaoke is very common-place, they have such devices. So no, it is not the average surround sound system, and it's definitely not a receiver. I COULD just connect my 5 speakers to a receiver that is actually built for 5.1 sound, but I do not want to give up the subwoofer. Do you get the picture? I'm starting to worry there is no proper solution to the setup I have.. I may have to buy another surround sound system.