Yes, most likely the DSP chip on the mainboard is not able to process the software modelling commands properly and this results in a distorted audio output signal instead of the intended modelled signal.
Sometimes, it could simply be a corruption in the system software itself; if this is the case, a factory default reset can correct the issue (powering off the amplifier first, then pressing and holding the "A" or "Clean" Channel button and while continuing to hold this, power up the amp and count to 8-10 seconds before releasing the button).
If that doesn't change the symptom, the mainboard will need to be serviced to correct the hardware issue.
Amps purchased brand new from a dealer have a service warranty coverage period of one year from the date of purchase on the store receipt. If you fall into that category, you can get your amp and a copy of the receipt to the nearest Authorized Line 6 Service Center tech to perform a warranty diag/repair on your amp: http://line6.com/service_centers/