Is my MBox Defective?

[js54]

I have a classic MBox and have noticed that when micing a guitar amp, even at low mic pre gain settings, I get a weird clipping noise in the high end.

Thinking it was a preamp issue, I got an external mic pre and went directly into the inserts.
However, when doing this, if I crank up the pre amp gain BOTH of the peak lights (1,2) will flash...??

All I'm trying to do is get a good fat input signal without clipping. With either the built in mic pres or external mic pres I have to keep my gain less then half or lower (depending on source) to keep it from clipping.....Is this normal?