Bad audio quality when recording with aux to USB - help!

The Macbook Air does not have a line in port. What did you plug the AUX cord into?

The headphone jack

Can you hear the radio playing from it’s built-in speaker when you are recording?

The only input available through the headphone jack on the Macbook Air is the “External Microphone” input. It appears in the Sound Input panel in System Settings when you plug in a headset/microphone combo. It is a mono input.
Your second sample recording is mono.
If you want the best possible recordings (in stereo from a stereo source such as an FM broadcast), get a good audio interface such as the UCA-202 or similar.

The audio is now much better after I started using the Behringer device. Thanks!

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