How do you know when a stereo sounds good?

I know it sounds good when the music coming out of the speakers matches what I think it ought to sound like.

When I play a recording I've heard a million times and hear something new I never noticed before.

When I get goosebumps or chills I know its good. However, the real test is certain songs will bring me to tears. 

hilde45   + 100

A wise and reasoned response.

Questions are bizarro

This is a question that gets me in trouble all the time; maybe in a different way than you are asking. I have had my system set to where it sounded really, really good; better than anything I have ever heard. I am sure from reading this forum that it  isn't the greatest out there but for me and my limited experience it's damn good. But then your question comes to mind and I start tinkering with speaker placement, crossover setting and such thinking it could be better. Unfortunately I usually lose the magic and have to start all over. It's important to me though to get it right with the equipment I have before I start thinking about upgrading anymore.

"Do you have a suite of measurements that removes all shadow of a doubt that you are getting good sound, sound that you enjoy? "

In the spirit of audio as a hobby, you analyze the frequency response in your room. Being a gear head, kinda like having the dyno report of horsepower or the time slip from the quarter mile run.

Beyond that, IMO it's not about the music. Music is emotion. That can be stirred with a minimum level of performance with equipment from Best Buy in a bad room.

Base on some threads, some treat their system as if it's a musical instrument and they're the musician. Not my style.