No wonder:
Satellites: 6 Watts RMS per channel (5 channels)
SubWoofer: 17 Watts
but it just doesn't sound the same after being remixed twice, a little muddy IMHO
You really can't expect much for what you paid for, under $70 right?
I can't set the output option to Encoded Digital Audio. When I select this, all sound stops, and if I try to play a song in iTunes, no sound and the progress bar doesn't even move on iTunes!
In Audio MIDI Setup set the Format back to 2 ch-16 bit and quit.
Quit and restart iTunes and you should be fine.
Anyone have any suggestions?
Get a better quality 5.1-7.1 surround sound setup.
I got a HK DPR 2005 with matching HKS-14 5.1 speakers. 125 Watts PER channel with 200 watt Subwoofer. You can find this online for about $1200. Be the last system you may ever need and the sound is wonderful. Remote control and everything.
I hear no "muddy" sound on my rig, so it must be your system.
Also if you install the iTunes Volume Logic plug-in, your music will sound professionally engineered and volume controlled.