Audio Mix on Magical Edition
The audio mix on the Magical Edition has a different sonic feel to it. For some the new 5.1 is considered an upgrade, but for me I prefer to 4.0 Dolby mix. The 4.0 sounds very much like what I remember the film sounding like back in 1981 (it was a re-release showing).
Another characteric of the 4.0 mix in "Xanadu" is it's uniqueness. I can't think of another film that had its sonic flavor. Also the 4.0 sounds more alive, while the 5.1 is a bit muted.
Another difference is that the 5.1 pushes the center channel more during the ELO songs. This, I believe, takes away from the dreamy echo sound ELO.
Of course, this all could have avoided by including the original 4.0 mix on the DVD. But that probably would have required an additional disc for the special features.
So now, I prefer to watch the older disc instead of the Magical Edition. While the ME version is cleaner, I can still sort of appreciate lines and scratches on the previous version and still have the 4.0 audio mix I desire.