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PLEASE tell me whats wrong with my setup
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You were able to go through the soundcard calibration with a loopback cable and get a good result. I'd like to see the graph of your soundcard calibration response if possible. Use the same axis as I have in the example below.
soundcard cal.jpg
You didn't mention going through the Check Levels routine to set up the output and input levels. I'd like to see a jpg of that if possible. It should look something as I show below.
check levels.jpg
brucek