I'm setting up my first modest HT (really just adding surround to a 32" TV and DVD setup) and I've spent several weeks reading all the great info here- now its time to start putting my own system together. I just have a few things I'm still confused about. First, my room is smallish, and oddly laid out, due to an overabundance of picture windows and doors- it about 18x9 (see bad attempt at ascii art, below). I don't want an out of the box system, but I'm not by any stretch a discerning audiophile, so "room to grow" is where I am aiming right now- getting good value for my money, with the ability to upgrade components in the future in the event my needs grow.

With that in mind, I've started with the receiver (too many speaker choices- that is going to take me some time) and based upon the posts here, it looks like it will be the Denon 1803/4 or the Yamaha RX-V1400. Two questions on these- 1) Are they overkill, as it is a small room in a small house on a small plot, and waking the neighbors is not an option? 2) Will they “up-convert” (I think that is the right term) the RCA and S-Video to composite? This is important for me because the room is so odd, I will have to separate the components from the TV, and only want to run one cable (also it will help with the “wife factor”- switching the TV or receiver from Cable to DVD is Ok- having to switch both may get me in trouble on the usability front).
Also, if you could answer a complete Noob question- should rear surrounds be mounted to fire “across” the seating area, or back at the TV? The Dolby site FAQ says across, where most audio sites seem to suggest aiming the speakers back at each other along the circumference of an imaginary circle.

Thanks in advance to anyone who can help! Now my bad attempt at ascii art:

“|” and “---“ = Walls
X= Bay window
D= Sliding Glass Door
c= sectional couch
(The TV is in a very small cabinet that is no wider than the unit, and is angled ever so slightly towards the intersection of the couches.)

|------------DDDDDDDDD|
.................................|
.................................|
.................................|
.........................(-TV-)|
|................................X
|c...............................X
|c...............................X
|c...............................X
|c...............................X
|c...............................|
|cccccccccccccccc.....|
|---------------------------------|