Do a factory reset on Onkyo, and don't use mic get a SPL meter from radio shack and measuring tape, mic's suck for all makes and brands
Buy a Denon or Yamaha, I stopped selling Onkyo due to it having bad quality control spent to many hours replacing and repairing receivers
Denon and Yamaha are better choice than Onkyo.
Newegg has great deals on speakers just have catch low sale price. Klipsch, Polk Audio, Definitive Technology
Home Theater in a Box systems are jam boxes.
Surrround receivers with 4K support only the newest models have Hdmi 2.0a, HDCP 2.2, and HDR...
http://www.accessories4less.com/make-a-store/category/htib/home-audio/receivers-amps/packaged-systems/1.html
Cheap packaged systems
Wireless rears is a no go for surround (wasted money) and really hard to find because it sucks
Yamaha has setting for placing your rears up front and not behind to...
Lorex has cheap wireless camera dvr kits
Just need power for cameras 12v DC
Battery operated camera's don't last long at all and not viable for 2 story
Most likely bad hdmi connector sparks came from voltage carried on hdmi, was it a really cheap cable like monoprice has. Hdmi cables can and will go bad especially if you unplug and replug a lot.
3-D is on it's way out, but if you buy a upper line tv it has 3-D anyway only lower line ie. Walmart cheap tv don't
A lot of kids blu-ray's are 3-D so your kids might like it.