Mine was also sounding awful because I was trying to use many EQ settings at the same time. Then I followed the advice of another member and turned everything off except for the Stone EQ.
Effect = Nor
Custom EQ = Flat
RBS Effect = Flat
Stone 3D = Off
Then adjust the Stone EQ frequencies the way you like. Even then, I can still get distortion where my Cowon F1 would be fine.
Also the headphone socket is very tight and is damaging (wearing away) the tip of the connector on my Sennheiser's
