Though possible that it is the processing in the electronics, usually (
as I understand these things) it is the design of the speaker that creates these problems.
IME, I noticed while playing with the crossovers for my BMRs (34Hz on the low end), setting them at 60Hz let more of their natural bass come through, but when crosed at 80, both my subs and BMRs performed better in terms of clarity of sound.
That said, i've heard two different approaches for this. I like the Octave-above setting for my XOs when possible. So if you have a speaker rated at 34Hz, I would want to go to 70 for the XO. Barring that, experiment above and below and see what sounds best. The other approach is to set at 1/2-an-Octave above: for simple math lets assume your speaker is 40Hz, then you would set the XO at 60Hz. Again... YMMV... and I would urge experimenting around with the frequency.
As far as the LFE channel is concerned, the encoded frequency range should be up to 120Hz. I've always seen people say to just let that be. It does not affect the other channels as this is specifically a Low Frequency Effect Channel.
On another note, Vaulted/Cathedral ceilings aren't IMO a bad thing. They break up parallel surfaces and assist in minimizing some of the modes in the room.
Please know, I do not claim expert status here, but I think there are a couple things worth experimenting with.
First: move things around. Perhaps you are getting bad diffraction from you center channel, assuming it is a horizontal speaker just sitting on a shelf. Same with your Mains. Positioning is everything and this is a simple and easy way to possibly solve it without spending any money.
Second: room measurements, if you can do that. Its next to impossible to say how to begin addressing the situation if it is accoustics without seeing what might be going on in terms of FR.
Third: as I said above, the possibility exists that it is a flaw in the speaker itself. You didn't offer us the whole picture of your equipment profile. B&W has a reputation for some good gear. The gear I experienced from them did not impress me, though. Please, to be clear, this is not a dig! Dig? Just my experience. Likewise, I've seen several well respected voices here say that some center speakers just don't perform well for one reason or another. Just something to keep in mind.
Beyond that, does your AVR/AVP offer a feature like Dialogue Boost? (Different companies seem to have this as a feature, but under different names.)
Hope this helps to get the ball rolling.
Please, if you can, let us know the whole equipment chain, and a photo or two might be helpful, too.
Cheers!