Installing the new CodecCommander gave me undistorted sound!
The "Sound" Preferences pane gives me Headphones/Line Out/Line Out/Digital out/Digital Out.
The speakers are plugged in to "m" (line out) and when I select the second "Digital Out" I get sound that way. None of the other outputs give me sound. The "Digital Out" is listed as an "Optical digital-out port", but that's clearly not what's being selected, since it is actually the analog "line out" ("m").
I tried both the switcher and the "tool". As soon as I selected anything, I lost sound entirely and couldn't get it back (ie. couldn't get anything out of "m").
I do now have sound, however... so this is great progress!