so now I have to use the headphone/record out line instead to record
That's exactly what it means. I had 4 different Vypyr 75's with a variety of problems and ended up returning all of them. The USB output on everyone of them was just as you described. The crackling, static, low-fi type sound. It's far from "studio quality", in fact it just plain sucks. I have a fairly modern computer (3.16GHz Core2, 4GB RAM, 7200RPM Seagate HD) and the latency was horrific. The headphone out is much better, but very thin sounding to my ears. It's not your cable so save yourself some money because I've been down that route. I have a Boss GT10 and a POD X3 Live and the USB recording outs on both work flawlessly on my computer. That's how I know it's not the cable or my computer, it's the Vypyr. This is one of the reasons that I'd opt for the Vypyr 30 if I ever decided to try one again. The USB is useless and there are no future plans that I'm aware of to make better use of it. The powersponge is also pretty useless. I have one of the new Vox VT50 and the power level feature on that works perfectly to play at lower volumes and allow for a less sensitive volume control. So for me the extra wattage isn't worth the $100 difference between the 30 and the 75, escpecially without an external speaker jack.