Getting back in the game

This is a good time to take this real slow. Give a lot of thought to how to do this.

It is very difficult to get high end audio sound from an AVR / home theater. By combining functions both can be severely compromised. The best is to have them completely separated. 
 

They can be combined using a pass through so your stereo speakers are connected to audio equipment to your speakers. You want separate audio preamp / amp of audio quality for stereo listening and then use the AVR for home theater and all the other speakers. I was able to separate my HT from my stereo system thirty years ago… so, I’ll let some of the folks here that have done it advise you. But a few things.

HT does not require the same high quality as stereo to be enjoyable (you are distracted by the video)… and as a consequence you are not going to get it. 
 

Combining multi functions in one box significantly reduces sound quality. AVR is a real problem, but these days integrated amps can be really good. I was listening to a Luxman (509), Pass (INT-60), and Audio Research (I-50) this weekend. I can recommend any of them… but I am much fonder of the latter two because of the more natural musical presentation.
 

‘Anyway, think, research, think some more. There are so many ways to do this these days it can boggle the mind. It is really easy to do this simply and end up with a mediocre system.

GHDPrentice-

This is really where I wanted to head in this conversation, To those who gave the excellent advice on Home Theatre....thank you so much!  However, I would like to attack the stereo system first now.  After hearing my speakers with just the reciever and streaming through a stupid tv, I can't wait to hear what this room can sound like!

So you thought the musicality of the Pass and AR were better in terms of musicality?  I have always heard that the B&W's are a tough load, and I absolutely don't mind an integrated.  

Also DAC streamer combined? or seperate?

In that small of room  I would put my money into a 2 channel system. If the B&W speakers are working well in that room for youI would purchase a DAC with optical (forTV), coax and USB (possibly AES or I2S) connections, an integrated amplifier or separate pre and amp, and a streamer. 

I find a 2 channel system quite satisfactory for movie viewing in a room very similar  to yours. 

Mesch, 

Totally agree.  I want to keep the speakers and build around them.  Anyone with experience with these 804 pre diamond version?  I was looking at Lumin dac and streamer combined.  What do you guys think?

Unless you have a large collection of records, focus on digital only. If you pursue both the analog and digital, you’ll end up neither here nor there. Add a turntable after you’ve happy with your digital front end and you have achieved a good degree of synergy between your amplification, speakers and room.
Just a thought based on experience.