Distortion in a receiver that only affects strong signals usually indicates a defect in or mis-adjustment of the:

The Automatic Gain Control (AGC) circuit is designed to automatically reduce the gain of the receiver's RF and IF amplifiers when a strong signal is detected. This prevents the amplifiers from being overdriven into non-linear regions, which would cause clipping and severe distortion. If distortion is only present on strong signals, it means the receiver can handle weak signals correctly but fails to throttle its amplification for strong ones. This points directly to a failure or mis-adjustment of the AGC circuit. The other components, such as the RF, IF, or AF amplifiers, typically exhibit distortion on all signals or even weak signals if they are inherently defective. The AGC is the only subsystem specifically responsible for managing signal strength variations to prevent strong-signal overload.