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2. I typically see 1 LED being lit

I think this is your problem. Assuming you mean the bottom led, this means that your input is about  40dB too low, meaning that you will get 40dB more noise than you should.

You need to adjust your input levels, either at source or by the [LEVELS] menu so that ALL the leds (except the top red ones) come on for high level signals. Then reduce your output gain to match.

This change will significantly reduce your noise level and distortion. It will also improve the performance of pitch shifters and dynamics processors.