They default is 50% for treble/bass. Those are the unattenuated defaults, and probably should not be changed unless you have hearing loss (which is the usual point for near-field equalization, otherwise, you people of normal hearing hear the distortion shoot up too).
Analog setup is fine, I'm more than willing to bet that your Audigy 4 has better DACs than your Logitech control panel. Best thing to do is revert all settings to defaults (and then turning off CMSS of course, PL2 is much better), and see if some of your songs still sound bad. If they still do, then:
1) I assume these are downloaded mp3s. They are probably lowbitrate songs. That's where the noise is coming from. Pick a higher quality source.
2) They are mp3s with very quiet scenes involving more laid back musical instruments. Most likely the mp3 was pre-encoded with too much gain to make up the difference (either the guy who encoded owned or assumed everyone would own equipment that was either poorly amplified or dynamically challenged, which is probably a correct assesment for most gamers), and the noise is just the original noise found in almost all mp3s, amplified a ton because the song itself was so quiet before.
Just some idle speculation on my part.