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I am having this exact same issue, and i've tried replacing the switch and the pot, but to no avail. I still hear the distorted signal when the pedal is in bypass. I believe it may have something to do with the LED being powered through the circuit, but i can't confirm. Did you end up solving the issue you were having? I also socketed the chips while i was soldering, so i am reasonably sure there should be no issues.
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