I had a similar problem with my MDI. From the dealer it was fine, but in the process of installing my Bluetooth I stuffed the MDI. Crystal clear audio from CD and bluetooth streaming, but crackling and reduced quality from MDI iPod and MDI AUX.
Problem was the Canbus connector. The Canbus connector is a square (almost cube) black thing with a handle that locks everything tight together. There's a white plastic terminal block on the back of the Canbus connector for the audio wires. When I fiddled back there I had dislodged the white terminal block from the black connector. It was half-in / half-out so the pins were only just mating with the terminal block. The white terminal block is 2 pins high and a dozen pins wide, from memory.
I reseated the white terminal block (pushed it hard into the black connector) and everything came good. Might not be your problem, but easy enough to check.
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