Hi PlaidJack,
I'm assuming you wanted to keep this simple, so I'd suggest you use ARC HDMI connection from the TV to the HT Receiver you buy. (I'd probably steer you towards a Denon that's capable of Dual Subs at that price point. Where are you located?) That way the TV Tuner output can flow back to the Receiver when you are watching TV if you want to listen to it in your HT setup. You'd plug the XBox into the Game HDMI input in the Receiver.
Most current HT Receivers "pass-through" the last input when the Receiver is shut down so folks who just want TV Sound don't have to fuss with the HT Receiver. My Misses would drive me crazy if we didn't have this feature. I always try to remember to set our to TV (CBL/Sat in our case) when I shut down.
Like Cos said above:
Question 2: Is a Soundbar a solid option or am I sacrificing a lot of sound quality?
- Yes, you will sacrificing a lot, not to mention connectivity options.
There is now way I'd move off what you have speaker wise into a Soundbar!
I hope this is helpful.