Update: I hooked up the beolab 7.2 speaker to the BeoSound 4 directly and had no distortion. I'm guessing it has something to do with the beosystem 3? I previously had the beolab 4000's hooked up to center channel on the beosystem 3 and had no distortion. Any thoughts? Thanks.

Another update: it seems to make a noise/feedback with every volume click of the remote. I'm going to reset system over the weekend and see if that helps. 

That is usually a ground issue. Check the cable's and connections.

Thanks L1NO! Do you think it is a ground issue with the Beosystem 3? Or maybe the surge protector?

diggs2701 wrote:

Another update: it seems to make a noise/feedback with every volume click of the remote.

Cable issue I think..  Odd that it doesn't show itself when you connect to the BeoSound 4 though...

Try a Mk2 cable, with full shielding. It may be interference?

I re wired the system and the volume clicking has now disappeared. The center channel still has the distortion problem and I tried multiple cables. Could it be the power cable? It is very strange that it works perfectly when hooked up to beosound 4 directly...

Any thoughts on this? Should I have a B&O person come out? They charge 250 an hr. Thanks.

diggs2701 wrote:

Thanks L1NO! Do you think it is a ground issue with the Beosystem 3? Or maybe the surge protector?

Ground-cable issue. Re-check cables and make sure they are the right type, not damaged and fit well. None of BangOlufsen gear should be grounded, but other devices trough HDMI (any connector) can ground the system making a ground loop.

It turns out that a fan in a separate room wasn't fully grounded. Once that was fixed no distortion. I almost went through 5 sets of different cables! Thanks.