Composite video immeidately scream STEREO, your HK is a surround receiver. Surround receiver, when dealing with stereo signal, attempt to FAKE surround with a 2 channels signal. The receiver will have a list of "modes" to accomplish this, some of it you may like and some of it you may not, you need to try out on your own see which is more pleasant to you.
What am saying is, nothing broken, this is normal, unfortunately it throws the choices to your court.