Problems with headphones and sound

I just got a PSP Slim off of ebay and have no problems with it. I didn't test the headphones jack until a few days after and the sound is distorted when i'm using my headphones. I tried a different pair and got the same effect. The distortion sounds something that had a high compression like 96kbps. Also for most of my cds that have vocal tracks it sounds like the cd was put into the karaoke machine and you can't hear any of the vocals. When I unplug my headphones it's fine, but it's only when I have my headphones in that it sounds like this.

Is it a hardware or firmware problem? And how easy is it to be fixed. I have tried resetting flash1 but it didn't change anything

Thanks

Try turning on the Dynamic Normaliser.. See what happens then.

I tried that, but it doesnt seem to do anything. Thanks

So is this a firmware or hardware problem?

It should be a hardware problem. Why don't you send it to repair?

Well I bought it used off of ebay and am working on getting the receipt for it which they need in order to swap it. I installed CFW 3.71 M33-4 on it and had to open the battery up to create a pandora battery (since I don't have access to a fat psp and this was the only to install the firmware with out a fat). Unfortunately I can't fix the battery so its stuck in service mode. I accidentally cut the wrong part and couldn't resolder it. Do you think that when I send it in that they would have a problem with the battery or the firmware and that they wouldn't exchange it? Has anyone heard anything about this?