For one thing, the Polk LSi's are notoriously difficult to drive - particularly the LSi15 and LSi25, but the LSi9 is very similar (4-ohm, 88dB efficient load). It's not surprising that a receiver (even a mid-level Denon) had a hard time with the LSi9's. Something like the Axiom M22 is going to be quite a bit easier to drive, and will achieve more of its potential when paired with a receiver (like a Denon 3806 or an Outlaw Model 1070).

You can get a very good core setup with a budget of $3000 - that budget could get a 990, a 7125, and possibly even the whole front three speakers. The Model 990 is a really great piece of gear (listening to mine as I type this) that can serve as the anchor for a system that will offer clear benefits over those systems at Crutchfield and Circuit City, and any of Outlaw's amps are good investments. First-rate speaker makers that offer a lot of value for the dollar have become fairly numerous online: Axiom's already been mentioned, but there's also Aperion, AV123, and a number of others that could fit comfortably within that budget. For that matter, Outlaw's about to start shipping speakers of their own, and $1000 could get you a pair of those ($1100 for the cherry veneer). There are also a number of good speaker makers that operate through the more traditional distribution channels (local dealers) that may be worth your attention. I've had my Paradigm Reference Studio's for almost six years now and still really like them.