OK, so the connection seems to be correct. Thus the reason for the distorted audio is the RDS level which is set to much higher value.
The module comes out from the factory with RDS level set to 2000 mVpp (LEVEL=128) which is ok for some equipment but it may be too strong for another. Unfortunately, the RDS level is not standardized and many broadcast equipment manufacturers do not specify the RDS level required for their transmitter. It is always necessary to adjust the RDS level after installation.
If the RDS is audible, it indicates that the level is maybe 10 times higher than required. So adjust the RDS level to considerably lower value. (Correct method is to use an FM broadcast analyzer.)
The RDS level can be adjusted either in the Terminal or in the Device Setup / Analog Control, as showed below.
Once the result is ok, confirm by *LEVEL in the Terminal or pressing the Apply button in the Analog Control.