I am not a fan of Jack. I find it complicated, and besides when Jack is running, only Jack applications can use it. Which means - you make a pause while recording, you cannot listen to music nor watch stuff on YouTube (instructional videos is another example).

You don't really need Jack if you are using Audacity, this will simplify your setup.

To the real answer -

Try running from the command line alsamixer and see if some line is "too high". Its possible that you the input channel you are using is over amplified.

Also - be sure to user alsa's loopback modele (sudo modprobe snd-aloop - which is persistent after boot, no idea how) instead of using PulseAudio's loopback module (as described here in Ask Ubuntu), you want the mixing being done by the Audio card, and not in software.

I am not a fan of Jack. I find it complicated, and besides when Jack is running, only Jack applications can use it. Which means - you make a pause while recording, you cannot listen to music nor watch stuff on YouTube (instructional videos is another example).

You don't really need Jack if you are using Audacity, this will simplify your setup.

To the real answer -

Try running from the command line alsamixer and see if some line is "too high". Its possible that you the input channel you are using is over amplified.

Also - be sure to user alsa's loopback modele (sudo modprobe snd-aloop - which is persistent after boot, no idea how) instead of using PulseAudio's loopback module (as described here in Ask Ubuntu), you want the mixing being done by the Audio card, and not in software.