Well, I had a friend come over. He says that it's not really the subwoofer that's causing the problem. Apparently the sub is lacking low low base (i.e. shaking the room). But he thinks the sound that is missing is midrange sound.
One of the scenes I tested was LoTR Part 2 during the battle at the wall. When someone gets kicked or falls over, there is no thump at all. It's completely missing. You hear a clank of the armor and that's it. But with the footsteps of the army, you can hear the rumble from the sub.
My buddy couldn't figure out what was wrong and is thinking it's either AVR (as in it's busted) or the room has major cancellation issues.
The other thing is that when we tried changing the crossover from 80, 100 and 120, there isn't much of a difference either. We tried changing all the settings -small, large, LFE, LFE+Main....
I think the next thing I'm going to try is to have someone bring over another AVR and see if that's the problem. If that doesn't work, then have someone bring a bigger sub to see if it fixes it.....or move my equipment to test in a smaller room with carpet.
Hmmmm.. any suggestions? Having another set of ears hearing the sound and hearing the same thing as me makes me want to shift the blame away from the puny sub.