What pickup were you using? Piezo's can cause popping issues when switching, especially using a piezo with a magnetic pickup because of impedance mismatch.
Louder volume with increased distortion is the way those things work. Many people use a distortion/overdrive pedal at the low settings and use a boost/volume pedal to crank the volume or the volume knob on their amp if more volume is available.
It may have been a problem with a chip or other component. Hope you get it sorted out.