Just had a look at the Tannoy subwoofer manual and it's actually pretty good compared to some!
To get the sub set up correctly with your receiver, I'd set it up with the power switch set to 'ON', and the phase, crossover and level controls set to the AV/LFE position. Then run the automatic set-up on the Onkyo, and you're pretty much done.
Once the set-up's done its thing, you can tweak the level up or down a little if you wish, but I wouldnt turn the sub up much more than to the 1 o'clock position on the level dial.
You can now switch the power switch to auto if you wish, so the sub will only power up when it receives signal from the receiver.