How to tame the midrange???

I am almost there with my system, except that the midrange sounds harsh, grainy, and exceptionally digital. Female vocals in particular. It actually sounds like clipping, but I can hear it at any volume level. However, the problem is more noticable as volume is increased. I listen to a lot of acoustic music with prominent vocals, so this is a real problem.
The room is 26 x 28 x 9. Furnishings are 6 piece HT type seating and carpet....nothing else. No treatments at all. I/C cables are Radio Shack's best. I plan to do room treatments and better cables last.
I am thinking a good DAC might smooth things out a bit. Or maybe seperate 2 channel from HT by adding a good 2 channel preamp with HT pass through. (the front speakers are already on seperate amps) Maybe a preamp with tubes. I suppose having the Denon CDP modified is an option as well. My focus is 2 channel. HT sounds good enough as is, and is a low priority. Budget is around 5000.00, but flexible.
The gear is:
Sunfire Theatre Grand II processor
Denon 3910 ....no mods
Classe Seven Hundred Mono blocks for fronts
Adcom 300x7 for center and surrounds (all bi-amped)
B&W 800N fronts
B&W HTM-1 center
B&W CDM9-NT surrounds
Another consideration is that I listen to Comcast Music Choice digital music channels quite a bit through their Motorola box. I think that makes a stronger case for adding a good DAC. I am new at this and rely exclusively on Goner's advise. Your thoughts are greatly appreciated.