Reply to Live phono input to channels C and D has terrible sound quality

Whenever I switch a deck (C or D) to a live input and then run any sort of audio signal through said deck, I have 3 options.

1. Set it to THRU. Means I can't use anything on the mixer (EQ, fader, filter, x-fader), and it sounds bad.

2. Set it to USB and set the input type to LINE. The level is way too low to work with, but at least it doesn't sound bad.

3. Set it to USB and set the input to PHONO. The level is good (sometimes too hot), I can use the mixer, but it sounds like...am I allowed to swear on this community ? Whatever, it sounds AWFUL. Hard clipping like nobody's business. I can bring the level down on the input device and turn the gain on the channel on my S4 way up, and that fixes the clipping but even then the highs are mushed and it still sounds impassibly bad.

Now I know the difference between line and phono. Line is for hot signals, such as an instrument like a guitar or keyboard. Phono is for mic level inputs, like microphones and, well, most other things. DAW audio outputs, other S4s, etc. What I cannot understand is why I can't get an input to sound good. Is this just a problem with the S4? Have I no choice but to accept my crappy audio conversion? HALP? PLEEZ?