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Also note that one of the diodes is reversed from your previous drawing.
The resistor values shown are typical. The higher value pot you had drawn may work too.
The LM386 power amp IC will run hot when it oscillates at a high frequency maybe because it is built on a breadboard (too much stray capacitance between rows of contacts) or maybe because a supply bypass capacitor (10uF to 100uF) is not connected close to the IC power supply pins.
The clipping diodes must be back-to-back and not simply in parallel. Then they clip symmetrically.
Use two diodes in series on each side so the output level is double the small level of only one pair of diodes and make it like this: