I believe that’s normal with WASAPI loopback… With loopback you are directly “capturing” the digital audio stream that’s playing and you can’t change the levels or otherwise monkey with it.
What’s the “real” problem? You can always reduce the volume after recording with the Amplify effect.
If the playback output is not too loud (not clipping) the recording level should be fine. If the playback is clipping (distorting), reducing the recording level won’t remove the distortion.
In the manual I read to adjust input level via the volume mixer, that seems not to work well, the sound display is rather truncated at the set level and not reduced.
What are you recording? Are you recording streaming audio from the Internet?