My first (analog) recordings on the JE500 did not come out quite well. There was a (inter harmonic?) distortion although the level indicators never touched the RED area. I was very disappointed with the sound quality. I tried again, but with a much lower input level. Now the level-bars came about half way, and it was much better. So it seems that maybe the level indicator bars are not to be trusted? I thought that I should use them up till the red 'over' mark? But only halfway or slightly less gives a much better result. Any comments someone?
I had a similar problem with my MDS-501, but I discovered that the problem wasn't with the recordings themselves, but in the line-out feed to my receiver. The output from the 501 was way too hot for my Sony MHC-300 CD-receiver shelf system to handle without distortion, so I had to place in-line attenuators between my recorder and my receiver. Incidentally, if I recall correctly, when I recorded with the level knob set to '4' (as was recommended for recording from Sony CD players), I had no problem. The decibel readout, however, never reached any further than - -7 dB, if I remember correctly, and I didn't like that. I didn't really realise, though, that I had a problem until I played some pre-recorded MD's in my unit. The distortion made them unbearable to listen to. It was then that I decided to buy the in-line attenuators and re-record my personal MD's so that the levels would ride on 0.
I never did figure out whether it was my recorder at fault, or my receiver, but since you are evidently having the same problem with your JE500, I suspect that Sony just makes their minidisc recorders with too high of a signal output. I would recommend that you do as I did and buy two 3 dB in-line attenuators with two coax-RCA adaptors, and connect them in-between your line-out cable and a second cable that would plug into your receiver. You should then record with your levels riding on 0, as is generally recommended. Recording with the levels too low will pose problems later when you should play back your discs in another player, such as a portable. People already complain about the signal output in Sony's portable MD players being too low, and recording a disc with low levels will just make the situation worse.