Based on what you report I would think its a hardware problem.  You will have to call Dell support as they are the only ones that can get it corrected under warranty, we can't do that on this forum.  The other option is to request a return if you still have that option.  Many times they will offer to replace it with another rather than have to do a refund.  
Have recently taken delivery of an Inspiron 7700. I'm really impresssed with it - really love it. But the built-in speaker/soundbar is just terrible.  At anything above minimal volume (about 15 on the scale up to 100) the sound gets really distorted and is basically unlistenable.  Is this normal or is it a hardware fault?  Sound is perfectly fine through headsets. 
Inspiron 7700 All-In-One speaker distortion