This is the signal chain:
(“A/D” is the "Analog to Digital converter.)
Analog domain:
Vinyl → Stylus → Cartridge → Pre-amp (RIAA equalization) →
Digital domain:
A/D USB converter → Windows sound system → Audacity → Hard drive
When not using the UFO 202, most of this occurs within the turntable:
Vinyl → Stylus → Cartridge → Pre-amp (RIAA equalization) → A/D USB converter → (output through USB connection)
When using the UFO 202 you can either take the signal from before or after the pre-amp that is built into the turntable. The UFO 202 needs to be set to phono/line accordingly:
Cartridge → Turntable Pre-amp (RIAA equalization) → [UFO 202 Line level input → A/D USB converter] →
OR
Cartridge → [UFO 202 phono input → Pre-amp (RIAA equalization) → A/D USB converter] →
In both cases, the clipping is most likely to be occurring at the A/D converter.
The A/D converter in the UFO 202 is only 16-bit, so to achieve the best signal to noise ratio and dynamic range, the signal going into it should peak at close to, but below 0 dB. The problem when playing very loud records is that the signal on the disk, and hence the signal from the cartridge, is likely to be over 0 dB, and so it clips when being converted to digital. This appears to be happening whether using the pre-amp/A/D in the turntable or in the UFO 202. The pre-amp can ‘probably’ handle the large signal, but A/D converters have an absolute cut-off at 0 dB.
The solution is to reduce the (analog) level, either before feeding it into pre-amp, or before feeding it into the A/D converter. Unfortunately neither the turntable or the UFO 202 provide this option.
If you have a stand-alone phono pre-amp (some hi-fi amps have phono inputs and “line-level” outputs), then it may be possible to connect the phono output from turntable, to the phono input of the amp, and it ‘may’ then be possible (depending on the amp/pre-amp) to send a reduced signal level to UFO 202 (set for “line level”), and thus avoid the clipping. If you don’t have anything like that, then we can look at other possible solutions.