Ok. I have aqcuired an Onkyo TX-SR705. My results are as follows.

Results with the 705:

1.) Using this Re-EQ feature helps the issue with exaggerated "S"'s
2.) As always cranking down the treble helps as well
3.) Lowing the center channel output helps the issue as well
4.) Standing to the left of the VP150 takes away the harshness of the "S"'s

So essentially there was very similar results between the H/K 635 and Onkyo 705. But the 705 has more features to handle the issue. I must say I really like the feature set in the Onkyo.

It seems atleast for the harshness that it is coming from the center channel.

The exaggerated "S" can sometimes be very distracting and harsh to the ears. To the point where I don't understand what people are saying.

As per Hutzal's suggestion I tried the M22 and it was better but was still there.

Now as far as hardwood floors etc. I'm not sure this would help with the center channel because it's aimed at the listening position. I have tried pointing it above or below but it puts to much of a reflection on the voices.

What are my options?

HG Cherry M80's, QS8's, VP150, and a pair of EP500's