That is useful information. I figured this was not an old fashioned passive fader circuit, but and analog IC feedback arrangement.
This is another great creation of Baxandal.
There is the classic Baxandal preamp.
This is a dual op amp with the traditional Baxandal tone control circuit between the two opamp sections. The volume control works by the 100 K pot changing the sensitivity of the second amplifier stage. This is across pins 7 and 6. This is the feedback loop. As well as lowering the volume by decreasing sensitivity and therefore gain, headroom is increased so making clipping less likely from that stage.
It works very well, but I can tell you from personal experience that if this is not implemented correctly you get the exact problem complained of in this thread.
Most consider a digital volume control the way to go now, but I know you can make the analog feedback volume control work well.
Unfortunately this Parasound unit is not designed correctly.