I haven’t used Audacity in ages, but I cranked it up recently to record some streaming audio, and the recording volume slider was ineffectual. Even though I had the slider set to zero, the meter showed what appears to be clipping:
Sometimes the recording level control doesn’t work with digital sources… You just capture/record what’s coming-in.
Does adjusting the playback level make a difference? I think it depends on the method you’re using to record streaming audio.
Usually, you can’t boost streaming volume into clipping while recording (if you can change it at all). And if the signal is coming-in clipped then lowering the volume doesn’t remove the distortion. It’s just “hides” it from Audacity because Audacity is just checking the levels.
…When you record analog audio, a signal that’s too hot will clip the analog-to-digital converter and then you have reduce the analog signal before it’s digitized.