I wanted to weigh in on this but I fear that my answer will be too long. But let me give it a shot.
In reality, we are asking two separate questions. First, is can I convert my two channel system effectively into a five channel surround sound home theater? The second issue is starting from scratch how can I create a great two channel system and also have a five channel system.
I have done both and have reach conclusions based on not great intelligence but on trial and error. Mostly error. Using your original equipment and combining that to create a second system can give you very good results. However I have found myself that the best results came from starting from scratch. Well almost scratch.
Of course, on this site so m any of us have great systems. Great being defined as systems we love sop it's hard to suggest changes to set ups we have not heard.
Speakers: you need to choose the best sounding, most musical left and right speakers for the system. Forget about THX speakers in my opinion. Notice how few speakers now today come with that designation. People never will complain that your left and right speakers are two musical or two detailed. Also THX will come out of your surround sound system if that is what you want. Further, blue Ray has changed the importance THX, with DTS master audio.
Your middle speaker, your center channel, should match the sound and timber of your left and right as much is possible for the best movie sound. This is easy to do when your first putting together a system but harder to do with an established one. Also the middle amplification should match that of your left and right. Of course this is a much more challenging task for an established system.
Placement: again, my opinion: the center channel should be the only thing in between your left and right speakers. Too many times I have seen a huge amount of equipment and between them. Mostly though in home theater, I have seen TVs placed on stands between the two speakers and this affects sound very much. You want to have the TV behind the speakers perhaps mounted on a wall. Also, since home theater adds a lot of equipment to your room, I really feel that most of it should be placed as far away from the front left and right speakers as possible.
Sub-woofers: and getting the most musical left and right speakers I am happy not using the sub woofer for anything musical I only use a subwoofers for home theater. I placed them behind the speakers and against the corners of the left and right walls. I realize that many two channel setups have sub-woofers in them. What I am saying is that for optimum performance for stereo I use the best two channel system I have.
Originally I had a Mark Levinson 32 preamplifier and I use that for all my two channel sound. My surround sound unit went directly to the center and the rear channels but went to the preamp for the left and right. I now have the Krell 707 which actually has a two channel preamp setting. When I removed the Mark Levinson 32 from the system last year I realized I no longer had a two channel system with a surround sound add-on, I really had gone all the way to a multichannel system. For CDs, radio, and phonograph I I only use the two channel sound and the two speakers and I’m very satisfied with it.
For the rears, I have two surround speakers one on the left and one on the right, and one in the middle of the wall behind me. This gives me technically a 6.2 system. Due to the shape of my attic I could not get a 7.2 system. But I find the middle channel, what they call the back channels, a very pleasant addition to the system. As a center channel is to the front the back channels are to the surrounds and it gives a great debt and great impact. To my knowledge, in a 7.1 system the two back channels on the normal anyway.
Thank you for staying awake during this post. I hope it was some help. I really enjoy my system it is, frankly, the best two channels system I have ever had and the best surround I've heard.