It sounds as if the problem is with the media player you are using for playback (this wouldn't be used in game sound).
I use winamp, and this has a pre-amp setting in the graphic equaliser option. If this is set incorrectly, and/or the bass is too high for your speaker setup then there could be distortion problems at much lower volumes than expected.
You could try ensuring that the equaliser is de-selected or the setting are the default.
However, I may be wrong..............I'll keep thinking...
oops, I've just read the previous posts properly, and this has already been covered by ORAC! Ah well, another coffee to kick start the morning then......