Altec Lansing AVS500 4.1 Speakers

I bought this system because of the name and price, and because it came with a sub. I have a large MP3 library and many different genres of music. The sound of all the MP3's and CD's is quite poor, all sound like the band or musician is playing in a bathroom with an echo and mic's across the room. I have tried every setting available to make it sound better, but have not found one to make the sound better.
I use it with Windows XP and a creative labs 5.1 sound card.