Used Vandersteen 2's & McCormack amp.
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I have the Ohm Walsh and I love 'em... but as the (CURRENTLY married) original poster specified, he can only spend $1200 and that won't be enough. He can try used, but the Ohms just don't show up that often around here.
The entry-level Maggies are an excellent value, if you can make them work in your unusual room.
For the amp, I would recommend Van Alstine. You can sometimes find something used here, or also direct from them (which will include some kind of warranty), for about $500-800. Incredible price/sound ratio there.
With your budget, you'll have to go preowned for sure but there's a lot to choose from here on Gon.
There are two preowned Rotel RMB-1075 5 channel amps for sale right now on Gon for $600.00 each. That's an excellent price. I have an RMB-1075 myself and love it. Purchased it preowned right here on Gon back in May 09. You get 120 watts/ch/8oms all channels driven with that Rotel quality and performance, toroidal transformer, British made slit-foil capacitors, etc. You can't beat it. That leaves you $600.00 for a pair of speakers. There's a pair of Martin Logan Mosaics for sale right now on Gon for $600.00. There's your $1200.00. Just a suggestion.
Thanks for the replies.
Unsound: unfortunately, i cant change walls. Turning the room has me staring down a 2 story 6ft wide stone fire place with flanking windows.
Budget change - just sold some pre-marriage junk so I have spousal approval to use the money for audio. So i can swing about $2200 for speakers/amp now.
Not much of the gear recommendations so far have really peaked my interest. At this point im looking for 1 amp and 2 speakers - choices that would double as a good HT set up when I add more speakers and power later. My usage will be about 35% music (2channel), 55% HT, 10% games.