You have two plugs because those RTi8s allow you to power the sub separately. That gold bar bridges your signal when you are powering the entire speaker from one signal.
Good news on the new wire, that stuff you are using right now looks sketchy at best. (it's twisted multi wire??)
You can still use the banana plugs on the new wires, I highly doubt that is the cause of your problem.
And yes, you are plugged into the correct output on the back of your receiver, the other to are for surround channels.
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