What you are describing is not a fault, this is the way Dolby Pro Logic works. It is a matrix decoder that converts two channels (left and right) to four channels (left, center, right and surround). The surround channel is sent to the rear speakers, together with the bass that bypasses the decoder. How the surround channel sounds is program dependent, on some recordings it may sound muffled while others have more information that is sent to the rear channels. For more information on the Pro Logic decoder, please see www.dolby.com.
The 3 channel mode is basically the same as the normal stereo mode with the addition of mono (left+right) in the center speaker. So in both stereo and 3CH mode the rear speakers play the same sound as the front speakers (left and right stereo channels) whereas in Dolby Pro Logic mode the rear channels play the surround + bass sound which can be quite different from the stereo left and right sound.
In a very simplified way you can say that the Dolby Pro Logic surround channel is the difference between the left and right stereo channels, so for a mono recording (where left and right channels are identical) the surround channel would be silent and for a stereo recording with a lot of phase difference between left and right channels (e.g. reverb effects and such) the surround channel gets a lot of information since there are more differencies between the left and right stereo channels.
So try to listen to different recordings and you will notice how the results vary depending on how much phase difference there is between the left and right stereo channels. Good live recordings (e.g. The Eagles Hell Freezes over tour) really come alive in Dolby Pro Logic mode where the rear channels recreate the ambience from the recording venue and the audience.
Dolby Pro Logic is also used to create a well defined front stage image in the door and dashboard speakers using the left-center-right channels from the Dolby Pro Logic decoder in a clever way that was specially developed by Volvo Cars in cooperation with Dolby Laboratories.