hipola:
The 40106 should not be getting warm... and of course the distortion should be loud :-)
The distortion is on the top left corner of the board above the tremolo rate knob. First look closely for short circuits, then cold solder joints (this is where the solder is sitting on the component but hasn't bonded). Check all the polarized components to make sure they're in the right way (capacitors, transistors, diodes).