You need to have a close look at how the signal is being processed. That's where the issue lies in this case.

You don't necessarily need to have the outputs being clipped to get distortion. I suspect the settings in the POD are the source of the trouble and the distortion is coming from the gain settings before it ever gets to the outputs.

I use a POD2 quite a bit and it's possible to have the POD model set so that lightly picked notes sound clean and when you strum or play harder, the notes distort. The distortion is in the preamp stages in the POD models and NOT in it's output so essentially, the signal coming out is nowhere near clipping but still is distorted. The pickup has a voltage/current output when notes are played. One note lightly picked creates a very low voltage that doesn't overload any of the gain circuitry in the signal path. BUT..... strumming.... which is multiple strings and hence a higher induced voltage or single notes played harder DO create a voltage high enough to put the stages into the clipping portion of their working curve..... and the result is distortion. If the master output level is set low, you will not clip the output signal in the DAW.... (No red lights in the meters) but the signal is clipped none the less. In the POD's, much of the gain comes from the particular Amp Model you are emulating.

I know, for example, that if I choose the Fender Black face model, I can get some really clean, glass shattering, tone..... but I can also pull back the master and crank the gain and get some dirty bite...... if I want a singing smooth distortion, the Rectified and Modern Hi-gain models get me there instantly..... so choose the models with care.

A hint or trick: If you need a clean guitar in one part of a song and something distorted in another..... consider the use of 2 tracks and record the parts with different models. I use this "trick" quite often when I need such a thing in a song. With a POD.... you could also use a floorboard controller and program the models onto the channels....I have a floorboard controller but rarely use it.

Real amps act the same way if you set the preamp gain sections up a certain way.

Just a note.... use the audio out from the POD into the interface..... I'm not familiar with the XT version but if it does interface duty, just use it's audio capabilities. If the Interface you are using has audio preamps in it.... you need to be careful that you're not overloading it's inputs as well. When I first got back into digital recording, I was using the mixer part of a Korg D-1600 into my Saffire Focusrite interface. My signals were distorted and nowhere near crystal like I was expecting them to be. At the same time, nothing was slamming the meters into the red either. So, just for grins, I plugged into the Saffire and left the D-1600 mixer out of the signal path.....waaa laaa... crystal!!!! The D-1600 found itself on Ebay the very next day and shortly headed to a new home. So do check to see if the interface you use has pre's in it.... if so, you may need to turn the gain down on the Pod or on the interface. I find myself having to back the gain on the Saffire down a few clicks when I use the POD.

Hope this helps you a bit.

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