Hi Florian,
Thanks for the reply! I don't think that's it, as there is no change in this even with headphones directly plugged into the Korg. I have also noticed that with the OSC levels really low, everything seems to be OK.
The 'distortion' is not like an overdriven circuit sound, it's a lot more bubbly. Almost like a high speed LFO is garbling up the signal.
I think I'll just have to send it in to a professional. I can't find any other references to this problem online.