Ok, so I know I'm gonna get flamed for this or whatever... but bear with me...

I bought an old washburn stealth from a guitar center a while back and decided to fix it up.

I put Guitarfetish crunch rails in the bridge and vintage 59's in the neck. They both sound great by themselves but when I flip the switch to the middle it sounds some kind of aweful. The harmonics are non-existant and it gets muddle and loud.

Reason being that the neck pickup has an output of about 8 k-ohms, where the bridge is about 16 k-ohms, and the difference in resistance and output makes the mixture something aweful.

Any thoughts about how to better balance the middle position of my swithc?
First make sure they're running in parallel, and not series and also check the phase (I doubt this is a phase issue though as you said it was loud).
You want a more powerful bridge pickup because the strings move less there, so they ned a stronger magnetic field to induce the same current into the coils. Phase seems to be the problem other than volume as Pyro said. Check that you didn't **** up the switch too.

edit: the dime series washburns are badass, it's the deans that blow.