Okay I seem to have solved this problem.
I'll try to explain the best I can.
I have my guitar plugged into the pod with the 2 XLR outputs from the POD going into the 2 XLR inputs of the M-Audio interface. I then hooked up the Left and right monitor output of the M-Audio to the back of my studio monitors. Now I have everything input and output through the M-Audio and it sounds great.
Now, I think what the problem I was having is the POD's USB. For one, there is no crackling or pops when I'm using the M-Audio now and all the tones sound good.
Also I should note that when I purchased the POD last year, I had to send it to Line 6 because the USB port on the floorboard didn't have a proper cover and the pins were exposed so they eventually got bent. I then wasn't able to get passed the POD rebooting over and over. When it came back, it was fixed with a proper cover.
I don't know. Perhaps it is just that the USB on my POD is screwed all up.
Thank you all for your help!