Hi Rock,
Because your NAD 356 lacks a dedicated low-level subwoofer output jack, you should use the high-level (speaker-level) outputs on the Nad to connect to the high-level inputs on the EP500. The speaker leads then go from the EP500 to each M22 speaker.
The EP500 will extract a tiny voltage from the Nad amp's left and right-channel outputs--there is no loss of fidelity--and then you can use the EP500's crossover control to route the low bass to the subwoofer. Set the crossover on the EP500 to about 80 Hz.
There is no need for balanced outputs; your NAD lacks balanced output jacks, so there's no point.
An alternative hook-up would be to run a set of high-level (speaker-level) wires from the B speaker output to the subwoofer's high level inputs, and a second set of speaker leads from the NAD's A speaker output to the M22s, but then you'd need to run the A + B speaker outputs together. You could still independently trim the subwoofer volume and blend with the M22s using the subwoofer volume control. Set the sub crossover at 80 Hz as before. This would give you the flexibility to run the M22s without the sub by using the A speaker outputs to drive the M22s without the EP500.
Properly adjusted, you shouldn't ever "hear" the subwoofer as a source of sound. You should just hear the greatly extended deep bass from 50 Hz down to 20 Hz.
Regards,
Alan
