Gary,
The S meter is behaving as you described with a steady signal.
The only issue that has me puzzled is how the audio distortion increases as the AGC time constant is reduced. I haven't seen this with any other receiver I have owned, analog or digital. I can see how distortion due to clipping could occur if the AGC risetime isn't fast enough to keep the signal from clipping, but my understanding is that the R4-C AGC switch only varies the decay time, and I wouldn't expect that to cause clipping. So, if the radio is behaving as it should, is this a characteristic of the Drake AGC design? If so, it isn't a problem because I don't operate CW, however, I would simply like to know if there is a problem with my R4-C that I need to track down.
--
Bill N0CU