160 GB IPod Classic : Sound Distortion?

Recently, I purchased a 160 GB IPod Classic from Wal-Mart. Once I got home and synched my notoriously large music library onto it, I immediately noticed a huge difference in the sound quality.  The kicks and snares were ugly, and the bass was even more disgusting! All of my favorite songs were so distorted.  At first I assumed it was the headphones, so I tested them out on my ''ex'' 8GB IPod Touch to compare - and everything was perfectly fine (and better).
I searched my issue online and seen many buyers like me having the same exact problem, and most of them purchased their IPods in 2009-2010!  How can a problem like this go unsolved for so long? Why wouldn't Apple change/fix the software to be up with the newer generation's standards if they are still for sale today? There has to be someway this could be fixed.
So all I want to know is if I really wasted $249 on a device so worthless? I only bought this product for the 160 GB of memory since I couldn't fit all of my music on my IPod Touch,  and now I feel robbed.

Music post 2008 ish is recorded into an MP3 file at higher volumes than prior to that era.
Modern DAC (digital to analogue converter) can deal with this increase in volume (earlier albums, particularly those ripped from 1980's CDs) will sound quieter.
Unfortunately the DAC in the ipod classic hasn't been updated from one of the early versions.
What I've done for some recent purchases, is run them through this volume levelling software:
http://mp3gain.sourceforge.net/download.php
There is an equivalent version for the Mac.  They are identical in operation, and one version is no better than the other.
I reduce the volume by about 10% on a whole album, even if it's only 2 or three tracks that are distorting.
Remember to keep a copy of your original files for safety.
The quality of the music does not degrade, and I'm really fussy and have $300 senheiser IE80s.  It's just the volume that is reduced so it doesn't upset the iPod classic DAC.
However, there's no getting away from it, that this is a REAL PAIN, and there should be NO EXCUSE for apple selling such an inadequate product.  It shouldn't be too long before the iPod touch or Nano is in the 200Gb region.  After all, they can fit 64Gb on a Micro SD card whose outer casing is smaller than my small fingernail, what are Apple waiting for?

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