Ceycey,
Unfortunately, I'm not sure your problem will be solved until you change your AVR. The 860 was a poor design and an insult to the Aventage line!
If you check the AH review, you will see that the output drops to 35W with 5 channels driven for 1kHz power sweep into 8 Ohms from 127W into 2 channels under the same conditions.
This is a 72.5% drop!
http://www.audioholics.com/av-receiver-reviews/yamaha-rx-a860/measurements
If we look at the Denon AVR-X3300W, the same measurements result in 119W dropping to 76.4W.
This is a 46.2% drop!
Generally a drop like the Yamaha is seeing can be blamed on the power supply simply not being up to the task of delivering enough current!
Furthermore, if I put on my tin foil (conspiracy theory) hat, I can't help but wonder that AH skipped one of their routine tests which is part of the 3 bullet points under
Power Measurements:
Continuous Full Power Bandwidth (CFP-BW) from 20Hz to 20Khz into 8 and 4-ohm loads (up to two-channels)
Note that the 4 ohm test was not performed. This would be another (and more commonly evaluated) way to reveal PS inadequacies. The closest the Yamaha review provides is comparing 1kHz Power Sweep for 1 channel at 4 ohms vs 2 channels at 8 Ohms (note that AH reviews typically provide power for 2 channels at 4 ohms...again the tin foil hat). What we have is 127W into 2 channels for 1kHz power sweep into 8 Ohms going to 163W for 1 channel at 4 ohms, or a 28.3% increase. For the Denon, we go from 119W to 218W for an 83.2% increase. Again, this is a reflection of an inadequate power supply!
The Denon is not an out-liar, it is what you would expect from a well designed AVR in this price range! The Yamaha is a very poorly balanced product to sell as a 7 channel amp for use with mainstream speakers.
If you are running all 7 channels and if your speakers are not highly efficient and/or drop to 4 ohms, I would expect you are driving your AVR into clipping on the loud passages, especially anytime their is a lot of content on all 7 channels. So if you are trying to get anywhere close to a theater experience, you are not likely to enjoy the sound quality.
For more reading on this, check this thread:
http://forums.audioholics.com/forums/threads/yamaha-rx-a860-aventage-7-2-atmos-dts-x-a-v-receiver-review.106743/page-2
Posts #24 and #25 are where it gets to the meat of things.
Edit: note that I am assuming your 840 shares the same amp design as the 860. I may be wrong on that, but when I saw you were having distortion issues running 7 channels on your 800 series Yamaha, I thought of this review of the 860.
