Last night I tested my new set up. ...
According to my levels I was not peaking at all. ...
My problem was distortion. ...
Any bass at all is just simply distorted. ...
Ideas ? Sugestions ? Thoughts ?
You provide all the evidence necessary to point to mic pre-amp overload as the problem (popularly known as "brickwalling"). When the level controls in your recorder or pre-amp are physically after the gain stage, the gain stage can overload into distortion. You can reduce it's already distorted output levels so that the meters show a reasonably low level. They can fool you badly that way.
For 16-bit recording, the solution is to start with the lowest sensitivity switchable gain setting (Low instead of High) and low settings on the variable gain control, then slowly increase levels until you get close to clipping, and then back them off.
For 24-bit recording, you never have to get anywhere near clipping (0 dB) to record with a wide dynamic range -- after all you have more than 120 dB of range and most live concerts have less than 60 dB dynamic range -- so be very conservative. You can always boost levels later (without adding any noise) in your computer.