Behringer Xenyx preamp S.L.S. with single ended input

Hoping to use my small two mono channel Behringer mixer; one channel mic, the other guitar. Plugging the guitar signal in, sounds so distorted even my old iron ears can tell; literally a "splatter" type of distortion. Hoping to ride whatever the channel compressors can give me aesthetically, so turning down the signal isnt a solution, as that also removes the compressor drive. Mic channel using balance XLR seems fine. Putting the guitar through a DI box to convert to balanced seems to have a better sound.

Why would this be?

I mean it's not so bad; I have a solution. In other schematics I've seen they actually use a whole op-amp to invert the single ended input for the (-) signal internally; Behringer apparently "saved a whole op-amp" in their channel design, leaving it to the user to figure out why it sounds like crap. I also notice all the claims in their spec sheet for the channel are for the diff mic input; the SE specs do not follow the same claims for distortion 0.006% and dynamic range, 130 db. Which, outta do it.

Schematic:

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I seemed to have solved it using a mic transformer as "DI box" from an old Shure bros microphone.

Just was curious why the circuit behaves that way. Something like balanced distortions cancel? Unbalanced there's no longer a signal to cancel with?
 
Hoping to use my small two mono channel Behringer mixer; one channel mic, the other guitar. Plugging the guitar signal in, sounds so distorted even my old iron ears can tell; literally a "splatter" type of distortion. Hoping to ride whatever the channel compressors can give me aesthetically, so turning down the signal isnt a solution, as that also removes the compressor drive. Mic channel using balance XLR seems fine. Putting the guitar through a DI box to convert to balanced seems to have a better sound.

Why would this be?

That's probably the phantom power your guitar (pickup) doesn't like. The DI box provides galvanic separation and therefore the phantom power is no more after it. It's a known issue with the cheap Behringer mixers, on some you can't switch PP off at all or only switch it on or off for all channels at the same time.