IMac 27 - very poor quality audio when using analogue headphone output

Question

Hi,
I've had my iMac 27 (i7 quad core, early 2010, OS X 10.6.4), hooked up to my hi-fi via the headphone output jack (analogue) since i bought the machine a few months ago, and its worked fine. However, the audio quality has suddenly deteriorated. The volume is very low, meaning that I can only hear anything if I turn up my hi-fi volume all the way, and then the sound is distorted (as you'd probably expect). Turning up the volume on say, iTunes, whist playing a track, combined with turning up the iMac's output volume does cause an increase in overall volume, but it only makes the difference between totally inaudible and very quiet! Its as if there is some internal output- level setting within the iMac that has 'stuck' at a very low setting!
Troubleshooting actions carried out so far:
Removing the audio cable from the iMac's headphone socket allows the Imac to play via its own internal speakers, and this works fine! (The sound is good, volume is decent, no distortion). So, its just the headphone audio that is affected!
I've verified the sound settings in system preferences. They look fine.
I've performed several soft and hard reboots (with up to 24-hours separating power-off/power-on cycles), but to no avail.
I've booted into Windows XP (bootcamp) and the same audio problem persists (so its not the O/S that's causing the issue).
I've checked the cable and my hi-fi by removing the 3.5mm terminating plug from the imac and sticking into my mp3 player's headphone jack. All works fine. I then inserted the 3.5mm plug plug into my laptop's headphone jack. Again, perfect sound reproduction through my hi-fi. I then returned the plug to the imac's headphone socket and the audio problem re-surfaced, so its definitely the imac that is at fault.
I've ran the extended hardware tests too - no faults found.
I reckon its a hardware fault, but just wondered if anyone else had experienced the same problems?
Incidentally, my Imac is well within its 12-month warranty, but the complimentary 90-day Applecare cover has expired. Looks as if I'm going to have to make an appointment with a 'Genius', but I didn't want to go through the hassle of transporting the system unless necessary. Thankfully, I've had none of the other widely reported quality issues, and apart from this audio problem the machine has performed flawlessly.
Kind regards.

Answer 1

I have 30 new imacs running Snow Leopard. They replace 30 emacs that were running panther. I have 30 headsets (labtech) that worked beautifully with my emacs. Used them so my kids could create imovie projects using imovie 6. Well all that has changed with my new imacs. I went to use imovie 9 today and what a disaster. NONE of the headsets would work as they had on the emacs. The kids had to wiggle the plugs and that would sometimes create sound out of one channel, no channels, or would create a crackling sound. Worse than that is that it would give the kids the spinning beach ball. They would unplug the headsets and after about 1 minute imovie would return to normal. I took some of the headsets and tried them out on an emac I have in the room and they all work. I tried them on my macbook pro and they all work. So, it is not wiring or a plug. The sound prefs are setup correctly. Any suggestions? Has anyone else experienced this problem? Here I have new imacs which will allow more sophisticated projects with the iLife apps, but can't use them due to inoperable headsets. I have tried three different brands of headsets and 2 of them will not work at all. These were brand new imacs - right out of the box, and brand new headsets. This is very frustrating to me and the students.
Any help would be appreciated. How can apple not design a fully functioning headphone jack as they have in the past?