One more idea - if you have a suitable source, try connecting something to the tape input and use the radio as an amplifier (press both FM & MW down to select the function). If the problem persists, we can then rule out the radio part as the source of the problem. The amp part will probably be much easier to fix, then we will just have to wait for Dillen to tell us what part usually fails
Come to think of it, Beolits have an external speaker connection as well - try some other speaker if you have one available! If the sound still distorts, at least your Beolit speaker is probably all right...