Is the sound correct / undistorted when you play the record through the stereo speakers that are connected to the receiver?
How exactly is the turntable connected to the soundcard? It should be turntable to the PHONO input on the receiver (with the ground wire also connected). Then you should use the REC OUT from one of the tape loops to feed the soundcard. You should NOT be using speaker outputs! Also, on the soundcard there should be a LINE IN or AUX IN and a MIC in. Make sure you are using LINE IN or AUX IN. NOT MIC in.
Once this is connected correctly, you should be able to play a record and hear the sound on your computer. Does it sound correct undistorted at this point?
Now inside Audacity, when you record you need to set the record level be using the system mixer (double click the speaker in the system tray). Make sure you do not exceed 0db or you will have distortion.
Can you list all of the equipment involved?
types of cables (RCA to 3.5 mini plug, etc.)