Like I said on the other website, the volume control is shown connected backwards. It shorts a dynamic microphone which doesn't care if it is shorted. Your sound source probably has a signal level that is much higher than a microphone and shorting it might cause poor sound.
The transmitter is missing pre-emphasis (treble boost) that all FM radio stations have. The de-emphasis (treble cut) in all FM radios will make the sound from this transmitter muffled like your stereo with its treble tone control turned all the way down.