Thanks for all the good info so far, although it's not exactly what I wanted to hear.
I moved the speakers apart another 1'+ and moved my seat back about another foot. It did seem to help a little, but its not there yet. Instruments that were before cluttered around the center image have been moved out slightly and have a little room to breath. On recordings where instruments are placed further away from center, though, the sounds seem to still be coming directly from the speakers.
I can't position the speakers along the long wall because the listening position will not be far enough away. The way I have it now is the best it's ever going to get (room wise). I may try some different cables, though, if I can find somewhere that will loan them to me.
I tried switching the polarity on one speaker, and it obviously made the situation worse. It sounded like a mess. It was very fatiguing and nerve wracking, even after a minute of listening. The center image was gone, but it would come back slightly if I switched to mono. Is this consistent with others' observations when switching the polarity on one speaker?
Now, to answer a few questions that have been asked...
Vader, the only room treatment I have is on the front wall between the speakers.
Drubin, the speakers are new (to me), and they have never worked for me. It's tough for me to say what I like about the Thiels. I can say that they are much too harsh, though. They could really use some calming down. Any thoughts?
David, the bass EQ was bad... made horrible noise (actually just a buzz).
I'm already using spikes. I noticed that these helped bass tighten up.
So, of the guys who have owned Thiels in the past... what do you own now? I'm also wondering what speakers would be similar performance wise for about 1K used that would work in a smaller room like mine AND work with my equipment. I listen to jazz and jazz based rock music mostly.
Please keep the info coming. I'm learning a lot about Thiels from this thread!