Hi. I have a NAD c350 which sounds awesome with my Wharfedale Pi-20's, both of which I intend to keep.
Would buying a yamaha dsp-e800 be the best way for me to st-up a decent home cinema kit? Obviously I will need the speakers, but the processor is my main concern.
Is there any other way? I don't want to replace my stereo amp as it would mean I would lose quality on my music.
Move your NAD c350 and Wharfedale's to a new location in the house and enjoy them as they are.. a great two-channel system.
Now, decide on a budget for your home cinema. Total including speakers. You can fit a complete system to any budget so understanding how much you are willing to spend is half the battle.
If the Yamaha has pre-outs for the main channels and your NAD has the inputs your golden. Run a set of interconnects from the Yamaha to the NAD and you're there. It's certainly been done before and it works. Make sure, though your Yamaha has those main channel pre-outs though.