I found this when reading the specs of the M1:
Fixed outputs, not controlled by volume at 0dB (same source as main out)
Not sure what that means?
After looking at both the website description of the M1CliC and the manual, apparently what this means is that if an analog input is selected (the unit provides both analog and digital inputs), the level of the fixed output will be the same as the level of that input. Unfortunately, though, the level of the fixed output when a digital input is selected is not specified.
In any event, after looking at the relevant specs for all of the components that were mentioned, consistent with George's comments it appears to me that the root cause of the problem is the high gain of the BAT preamp (18.34 db per John Atkinson's measurements of the SE version, as published in Stereophile), coupled with the fact that nearly all digital sources having non-adjustable unbalanced fixed outputs provide "full scale" (maximum) output levels of at least 2 volts, and often more.
That would certainly explain the limited range of the volume control that can be used when the fixed outputs are boosted by 18.34 db and then applied to a 200W/8 ohm amp having 25.8 db of gain powering the 92 db/1W/1m/8 ohm Triangle speakers. I'm not sure, though, how to explain the distortion that was mentioned, which occurs with the Triangle speakers but not with the other lower efficiency speakers.
Also, in most cases I would second George's suggestion of trying the system with the preamp removed altogether, but after looking at section 7.3 of the NC400 datasheet
I'm not certain that would work, given that the M1CliC provides only unbalanced outputs, and depending on how the power amp is configured externally to the NC400 module. I'll mention also, BTW, that the BAT's output impedance rise he cited is not an issue in this case, as the NC400 has very high input impedance.
Finally, it appears that the BAT only provides balanced inputs, while as I mentioned the M1CliC only provides unbalanced outputs. Which leads me to wonder how well the BAT may be performing when provided with unbalanced inputs. If you are using adapters or adapter cables to connect the two, you may want to consider using a Jensen transformer instead (~$275), which would provide the BAT with a true balanced pair of signals. To reduce the signal level, you might then also want to try a pair of Rothwell attenuators, in their balanced version, inserted into the input jacks of the BAT.
Or, alternatively, just use the M1's variable outputs into the BAT, as you have done, and be happy. :-)