Distortion of Recording When Playing Back Recording

[acs]

I am using:
Windows XP Professional 2002
Pro Tools 7.3
Project Mix IO connected to computer with FireWire
Intel Core 2 Quad CPU Q6600@240 Ghz
256 MB RAM
Partioned 400 GB for Pro Tools as per Start Up Manual
Installed FireWire driver for Project Mix IO
Set Up Project Mix IO in Pro Tools Hardware

In order to solve my problem I have:
-read the online before you post instructions
-searched Digidesign's database
-searched DUC's database
-tried calling Digidesign help line, but was unable to get through after waiting patienly for more than 90 minutes
-looked in ProTools Manual and Menu Guide
-called the music store where I purchased ProTools
-looked in Pro Tools for Musicians and Songwriters by Gina Fant-Saez
-set HUI protocol
-played around with the playback engine

I recently purchased Pro Tools M-Powered and a Project Mix IO. When I record tracks they sound good, the levels are good with no peak overloads, but when I play back my recording there is horrible digital distortion (sounds like a bitcrusher distortion effect) the entire time.

I have set the hardware setting to default for Project Mix Io. I have been trying to problem solve this for two weeks!