Thanks...there are 5 sets in and around the house...not planning on running more than 3 at a time ..
With five sets, I would lean toward a separate multi-channel amp (does not need much power per channel--assuming most of these sets are for general background listening/party music, etc.)
Can I watch tv in 5.1 in the house,while my wife is listening to the radio outside at the same time???
Yes, by using the 863's Zone 2 preamp outputs to a separate amp or by "Connect(ing) the speakers in the second zone to the EXTRA SP speaker terminals and then set the "EXTRA SP ASSIGN" to "ZONE2". For five sets this would imply buying a six speaker set switch such as:
http://www.amazon.com/Monster-SS-6-Speaker-Switcher-Speakers/dp/B00004Y3UY
I use their four speaker switcher version, and have had good luck with it.
Would I get better sound with an upgrade in receiver or am I better off with adding an amp...I guess thats the main ???
No, the 863 is an excellent receiver (the 663 would accomplish same thing for a better price point). BOTTOMLINE: add the extra amp for your 5 other zones designed to support whole-house audio, there are many available.
ps..also thinking about sherwood newcastle 772 7.1 receiver...any thoughts???
Sorry, I am not familiar with Sherwood or that model. I am partial to Yamaha and Denon AVRs based on my experience (also do not recommend Sony for same reason). Others speak highly of Onkyo and Marantz--look around, enjoy the hunt.