The PT2399 is an old chip, no longer in production and it never worked very well to begin with. It digitizes the analog input, writes it to a register, keeps doing that until the registers are full and then the voltages are sent out to a digital to analog converter in a FIFO bucket-brigade format.
High frequencies are lost and the dynamic range is a bit compressed and some hiss/buzz may be added for your listening pleasure. The longer the delay, the more high frequencies are lost.
also, you may be getting a type of "aliasing" Which is an interference patternbetween a digitally generated sound effect and a digitally collected signal near the same frequency or some harmonic of the signal.
the best way to handle the volume is to connect a pot between the output of the PT-2399 and ground, then use the output of the POT wiper as the source for your audio mixing.