Upgrade help, media PC

Archived from groups: rec.audio.tech (More info?)

I am looking for resources and recomendations for an audio upgrade.

This is my current set up:

basics-
Athlon 64 3000+ (754)
Asus K8V-SE D
OCZ 1GB PC3200 DDR
Lite-On CDRW/DVD COMBO

audio-
onboard ADI AD1980, 6-channel CODEC w/S/PDIF out interface

speakers-
Creative Inspire 5.1 5300 (connected with 3 analog mini jacks)

the room is 11'x 12'.

My audio needs are as follows. I use my computer basically as a complete
media PC. I listen to a lot of music. Mostly MP3s, but also CDs. I also
watch DVDs and TV and divx files from the internet. My programs of
choice are Winamp for MP3s, PowerDVD 4.0 for DVDs and MPGs, and WMP 10
for all sorts of .avi and CDs. I rarely game. I do not listen to music
or TV at high volumes. I simply do not like loud music (plus I am in an
apartment and have to deal with neighbors). Along those lines, I am not
a fan of boomy, overbearing bass. I used to work a lot with computer
sequenced music (programs like Acid and Fruity Loops) and I've recorded
through a mic before (the only reason I mention this is because I have
always been tempted to purchase a sound card marketed to music
producers, with a break out box with a plethora of output and input
options, but never thought the price justified the amount of use I'd
probably not be getting out of it).

Why do I want to upgrade?

I am not satisfied with my current set up. The weakest link right now is
my speakers. I believe the center channel is malfunctioning. The
subwoofer and center channel are on the same jack (from motherboard plug
to subwoofer plugs). It seems like all mid and high frequencies are
being cut. For example, when watching something with AC3, I can hear the
soundtrack and effects fairly well, however, the dialog is really
muddled to the point of being indiscernible. The dialog is coming out of
the center speaker. I have switched out the speakers, so that is not the
problem. I have also hooked up the speaker set to an older computer with
onboard 5.1 sound (asus A7V333), and the center still does not work. It
sounds like dialog if it was coming out of a subwoofer. Its just real
deep and muddy, to the point where it ruins the movie (how can you watch
a movie if you cannot understand the dialog)? Turning the center channel
off by adjusting the windows speaker settings from 5.1 surround sound
speakers to quadrophonic speakers, sends the dialog to the left and
right front speakers (althought there is a slight echo of the muddled
sound).

I hope I explained the problem articulately. Anyway, I figure I should
just get a new set of speakers. I have been doing research and I've read
good things about Logitech Z-680 and Klipsch ProMedia. I've been to
sites like eCoustic and 3dSound, and general computer review sites. But
during my research, I discovered that a higher quality traditional home
theater speaker set up could be had for a cheaper price than the PC
targeted systems. I have been using google, but I haven't really found
any guides for using home theater speakers with a computer. I have so
many questions, do I need special cables, do I need an amp, or preamp,
or receiver, or decoder box? What are some good brands etc etc. While I
am comfortable with building a computer from scratch, I am clueless when
it comes to contemporary audio components.

So anyway, I have decided to make this post and just ask the following:

a) what would you upgrade on my system? am I right to ditch the
speakers, or would money be better spent with a stand alone sound card?
my budget is around $250.

b) where are some online resources for non-PC speakers? and are there
any guides for using home theater speakers with a PC?

c) does anyone have a couple specific recommendations, brands, models?

Thank you for your time. Sorry this is a little wordy, but I wanted to
be thorough.

-Drew