When I call other people I have frequent complaints that they cannot understand me as my voice is quite distorted and too loud. I've received calls from friends using my phone and it sounds terrible -- as if you've cranked the volume on the stereo so the speakers totally distort. I've tested with my bluetooth headset and the volume issue appears to go away. I bought an unlocked TyTN II with Windows Mobile 6.1 installed and use it in Laos. I've also tested it with a friend's SIM card from another phone company but had the same results. It appears the microphone for the phone is much too sensitive and as a result plays my voice far too loud to other phones which causes my voice to be distorted, or in some cases inaudible. I currently have to (nearly) whisper in to my phone so the person on the other end can understand what I am saying.

Anyone have any ideas? I am unable to locate anything that allows me to adjust this volume on the microphone. It's a serious problem because I can't continue using it as a phone w/o using an external headset which is not always convenient or desirable. In the worst case I'll be forced to cease using the phone function and buy a cheap phone just for phone calls

Which radio are you using? There are reports that the radio actually does this rather than the mic in the phone.

You might also try playing with the settings in hkey_local_machine/software/htc/audiogain and see whether that helps. This may be in KaiserTweak over at XDA-Dev.