So, you were able to listen to the two audio tracks separately?
-*-*-*-*-*-*-*-*-*-*-*-*-*-
Despite everything you do, unless you spend A LOT of money on headphones, you are not going to hear everything when you're on set (there's always "bleed") - at least until you have A LOT of experience. And you still need the great headphones.
A while back I got to try some custom headphones - they were the Sennheiser HD-250 II speakers/electronics put into very high quality ear protectors (the kind used in airports and on pistol ranges). (They also make them with the MDR-7506 speakers/electronics.) Even with all my experience it was amazing how much I missed when using regular headphones.
What audio interface, speakers, etc. are you using when you edit the dialog? That may be what is distorting, or you may be pushing the levels too hard in the DAW itself and you're getting digital distortion/clipping.