The Logitech won't work, it lacks the video switching capabilities required. It also offers zero upgrade path for nicer speakers later on.
I would call this a list of the requirements from the prior conversation:
1. 5.1 sound at a minimum
2. Video switching with at least 2 component inputs to handle HD cable and a DVD player
3. Multiple digital audio inputs to handle listed sources.
4. Best bang for the buck within a very tight budget right now
5. Potential for upgrading individual components down the road
That is why I recommend the S770. It isn't great, it is good. Very good for the money. When it was $500.00 it may have been a bit over priced, but was still good for the money. A refurb for under half that price? Yeah, THAT is a deal and will sound great compared to small tinny speakers and systems that offer zero upgrade path at that price point. ie: Really cheap HTIB dedicated systems.
Within those 5 requirements, I am open to be as wrong as possible and would love to hear other recommendations that fit the bill.
Don't forget - the S770 doesn't include a DVD player - you will still need one of those right? Is that included in the 400 bucks?