Sty, in my view the "closest setting" part of the HK language should be disregarded. Although your M80s have good response at 40Hz, your EP500 is better and you should allow it to handle what it does best by setting the M80 crossover at 80Hz.
On another point, which Randy mentioned, there's a misunderstanding about setting the "sub crossover" on the HK635. This isn't actually the overall sub crossover setting(which the settings for the "small" speakers determine). It's just the frequency above which the LFE channel which is occasionally present during movies is rolled off before going to the sub. Theoretically the LFE channel extends to 120Hz, but in practice movies contain little or no LFE above about 80Hz, so 80 would be a good choice for the LFE low-pass. The reason sometimes given for not setting it at the 120Hz max is that this can allow in some unintended noise.
