Home Cinema system help required

TBL

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I've currently got a Technics SC-DV170
(http://www.lasyl.co.uk/SCDV170.htm) which is a combined 5 disc DVD
player, tuner, Dolby Digital AMP, and tape player.

It doesn't have any optical inputs, which I would like to use for my
XBOX and Sky+.

My query is, what am I best buying:

1) A new system like the lovely Panasonic SCDT310e
(http://www.panasonic.co.uk/home-cinema-systems/scdt310e/)

2) A receiver/amp, and use my existing speakers (if this is possible),
and use the XBOX as the DVD player. Apparantly the XBOX is actually
really good for DVD playback, as good as some mid-high range standalone
players.

3) A receiver/amp, and buy new speakers, using the XBOX for DVD playback.

I would also appreciate ideas for kit, I don't want to break the bank,
but would spend up to £500.
 

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