It's hard to tell exactly what's going on in there. More photos might be helpful. I'm not sure exactly what you mean by sheetrocking over the built in, but if it's something like The Cask of Amontillado, where you're just going to build a wall over what's already there, probably not a good idea. If you were to remove the built in, you have an opportunity to construct some room acoustic panels at the front of the soundstage. It's something to look into.