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Firstly, thanks for the detailed response.
Although I kind of know what I am talking about, I'm still fairly new to all this so please bear with me.
At the moment I am just using the amp in the "pure" mode. I have looked at crossover but havent tried it yet.
I was thinking of an outboard DAC, keeping the volume constant, and using just the amp to control volume.
I must admit, I am not familiar with Audyssey so this is something I will look into.
I think to start with, I should investigate the streaming option. I was slightly put off by the interface of this espeically when using for video.
For reference, I currently have a PS3, sky HD and the PC hooked up to the Onkyo 515 which feeds Q ACOUSTICS 2000i and the ouput is Samsung 55D8000
We all have to start somewhere, that's for sure...with my first receiver I didn't even hook up the speakers to the right speaker ports, imagine my surprise when the front left speaker sound came out of my rear left surround...
(Apologies if this is all stuff you've known before) Audyssey is a method of equalization that attempts to compensate for the sound anomalies that occur in your room. Certain frequencies may be boosted or reduced depending on any number of things...types of materials in the room (glass can make high frequencies seem more prevalent for example), the dimensions of the room (bass can "pool" and sound boomy in parts of the room, lean in other areas), etc.
Audyssey runs a series of test tones through your speakers, and feeds the results to its processor in your receiver by "listening" through a microphone you place at your listening position. After it takes the measurements, Audyssey attempts to compensate for the "boosts" and "cuts" in the frequency response. Some people like what Audyssey does, others do not- it is a very personal choice. In my room, for example, which is brick and heavily carpeted, the "raw sound" is very wooly and midrange-oriented with a big lack of detail. After Audyssey the sound is much more balanced and even...but to someone else that might sound too "lean," so the nice part is if you run it, you can compare and see which one you like better.
Running Pure mode bypasses Audyssey, so if you follow the instructions and run Audyssey you can toggle back and forth between Stereo mode (with Audyssey) and Pure (without Audyssey) to see what types of changes there are to the sound. I know this is OT so if you want to discuss Audyssey more feel free to PM and we can continue the conversation there.
OK, long tangent aside...your PS3 actually can be a very capable media player if you like the interface. Assuming it is connected via HDMI to your receiver, the results should be basically identical to if you bought another sound card and used optical or HDMI to feed to your receiver. If you haven't already, look into software like PS3MediaServer or Asset UPNP for your computer. Both should be free. Once you load your music library in there (I think they both support flac and wma, but not 100% sure), you can access your library using the PS3 interface and controls and see if you prefer that to the Onkyo. Best part, it's free
That might be a good alternative to the Onkyo interface.