I reinstalled the driver, as suggested, but it still sounds awful. It is definitely not anything on my end, as I can use the same cable in another computer and it sounds awesome.
There is absolutely some sort of compressor/limiter happening here on this laptop. If I can't sort it out, I guess hp will have another returned computer to refurb and pass on to some other buyer who doesn't have as perceptive hearing as I do.
I wonder if there is something in the driver/hardware/software that is causing this to happen through the headphone jack? Anyone else have any ideas?