All I can suggest is that you carefully check the levels. I have the mic outputs set to maximum on the screen. If the input is too high it will distort.
I have used my Audya with SM58, Sennheiser, AKG, Samson, Heil and others with no problems at all.
When I first got it, there was distortion until I got the levels, e.q. and effects set right.
I don't have it in front of me so I can't tell you the exact settings right nowl.
I am running 4.0 also.
DonM
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DonM