I'll echo JohnK's always sage advice.
Get front main speakers first. That will make much more of a difference than new electronics.
M22's are wonderful speakers. I got M60's and have never been sorry. I don't see the wisdom of the W22's in your situation.
My experience was that going from 5.1 to 7.1 was not really "worth it". The new formats will still give you uncompressed audio even if you're listening in 5.1.
While the 3808CI is universally revered, I think the best value out there right now is the Onkyo TX-SR705, 706, 805 or 806. ESPECIALLY since you have an HTPC. You don't need the scaling and you don't need the ethernet streaming. By joining ClubOnkyo, and with the current 10% off sale, you can get a
706 refurb for about $500 including shipping.
It's pretty unlikely that your HTIB is actually putting out its rated power, so any dedicated receiver from a major manufacturer in the 90-100 watt range is going to be just fine. Likewise, the Axiom speakers are likely to be much more efficient than your current setup.
Don't skimp on the sub. I'd get that before a center channel.
