There are differences between ProLogic and ProLogic II (or IIx).
- PL only works on 2 channel analog sources. It is actually a 4.1 system. The surrounds play identical material (dual mono) and additionally they are band limited to 7 kHz (no frequencies beyond 7 kHz).
- PLII works on any 2 channel analog or digital source. The surrounds are stereo and are not band limited. The surrounds can therefore play different sounds from each speaker and all the way out to 20 kHz.
- PLIIx is the same as PLII but can additionally take any 5.1 digital format and expand it to 6.1 or 7.1.
- PL, PLII, and PLIIx all work on any source that is Dolby Surround Encoded. If the source is surround encoded then the result of processing will be exactly as the engineeer intended; if it is not surround encoded then the result will be slightly different due to the differences in how the surround info is handled as noted above.
Speakers are probably a better upgrade path than processing but you will eventually want a receiver with PLII(x) processing.