what happened is when you use the ext mic setting it only powers the mics with roughly 2.5 v dc, no where near what you really need to power the mics you have to their capabilities.
i have done some testing at home also and found the ext mic setting to distort rather easily.
for concert recording purposes i am currently using a 9v battery box to adequately power my mics, using the line in setting instead (especially now that line in level is controlable!!). All my initial testing with this setup have been great, now iRiver just needs to fix this click bug in the recording every 40 seconds (even using optical

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Will
iHP-120
MM-EBM-1 Elite Battery / Filter Module (7 position bass roll-off)
MM-HLSC-1 HighLine "Sennheiser Driven" Cardioid Stereo Microphones ( 30 - 20 Khz.)