- On the speaker wire.
You should not enclose the sub in a cabinet. Why not is the same reason why you shouldn't put it in a corner. The reflections will build up and cause muddy bass. Where you had it before was better. The rears should be closer together in the center also. See the THX guide for 7.1 speaker layout.
http://www.thx.com/home/setup/speakers/71.html
They don't have to be as close as they have it, but closer is better according to them.