I usually don't post in forums; but, this same issue hit me earlier today while trying to record a few tracks. I ran through a bunch of different options to no avail. It wasn't until I powered down the Helix, flipped the switch on the power strip, and restarted the unit before it kicked the Helix back into it's normal operating mode with fully functioning sounds. With that said, I ended up getting a recording of the unit in the degraded state and in the fully functional state.
If you look at the attached audio waveforms, you will see two separate recordings. The one on the left has Line 6 operating in the degraded state, where the high and lows are cut and you cannot get a good sound out of the thing if your life depended on it. I would like to point out that no amount of adjusting the Line 6 Helix volume and/or my audio interface volume was I able to push past the high and low limits seen on the left. The waveform on the right has the Line 6 operating with full functionality after I flipped the switch on my power strip, where the unit had all of the full sounds you can get out of the box. I cannot say I know exactly what's going on here; but, it's pointing to bad engineering. There seems to be something wrong with either the Line 6 RAM holding bad data, power transients triggering this degraded state, or a potential Electromagnetic Interference (EMI) issue (if not a combination). Regardless with Line 6 trying to keep their price down, I doubt they hired anyone to look into this issue since it just takes a hard reset to resolve it, which is probably why they tagged you with the "user error" classification.
-James
