Crackling distortion

The tonearm connector (Lemm) must be inserted into the junction box in order to get a correct VTF reading.  Otherwise the unipivot arm will have external forces on it when you try to measure the VTF.
I suggest the following:
1. Have your turntable in the state like you are ready to play a record.  If you twist the wire, whatever, then put a twist on it.  I personally have no twist on my wire and have the Anti-Skate set to the absolute minimum.  One donut at the top of the vertical bar, with the fishing line on the top, and no donuts on the horizontal bar.
2. Build up a platform on the side of the platter next to the tonearm.  I actually use the box that the digital gauge came in and DVDs under the box to get the platform of the digital gauge EXACTLY the same height as a record on the platter.
3. Put a record on the platter, a flat one, make sure it is flat.  Use the center record weight and put it on the box where the digital gauge is, in case you have to extend the platform out pretty far to the cartridge.  The weight on the box, ensures you are not going to tip everything over.
4. Zero the gauge, line it up.  When you put the cartridge over the platform, since there is a magnet in your cartridge, with the magnetic force you might see a negative weight.  That is why it is important to turn on the gauge and zero it before putting the cartridge over the top of the platform.
5. Lower the cartridge with the stylus exactly in the center of the dot on the digital gauge.  
6. do it more than once, which will kind of give you an average reading.
7.  If your readings are off by a lot, then something is moving, or you don't have the stylus exactly in the center of the dot.  Keep trying.
8. Move the whole setup off to the side when you are adjusting the weight, you don't want your stylus hitting the gauge.
9. Make sure you tonearm is not resting on the armrest when you are doing the weighing.  Make sure it is not even touching the arm wrest.  
10.  Use the Allen wrench, and the back weight, which screws into the arm to fine tune the VTF.
11.  To see the effect of height, after you everything dialed in, add a couple of more dvds under your platform and weigh it again, and you will see the VTF go up, probably by 0.3 grams or so.

Thank you for your advice. I'm dense headed sometimes, so forgive me when I ask what is the purpose of steps 2 and 3. Is this so you don't have to level the tone arm for the the FG and then level it again for the record? And what do you mean by "center th erecor weight"?

But just so I undestand you (btw I don't have the VPI contraption for antiskate, just the wire) tell me if my proceedure will follow yours (assuming leaving out steps 2 and 3 until im more clear on those):

1. Release all twist on wire (I prefer this myself)
2. hook up Lemm fitting
3. set FG on platter and make sure stylus in in center
4. I will adjsut VTA so are is level with platter
5. set tracking force
6. remove guage, put on flat record
7. adjust VTA so level with record (tracking force should be the same.)
8. double check all settings including tracking force adjust if necessary.

Your cartridge isn't properly aligned. I had the same symptoms until I figured out how to correct that.
Good advice above..
The first thing I needed to do was set the proper overhang using a protractor or gauge. By definition, the overhang is the distance between the needle and the center of the spindle while the needle is in a straight line through the spindle to the pivot at the rear of the tonearm. So you have to get down and sight it like you're aiming a rifle.
Next, the VTA. The face of my cartridge is 90 degrees to the top, so if I can get the face of the cartridge square to the platter, the arm and cartridge will be level with the platter. I used a block of wood (similar to dice) to check for square as I adjusted the height of the tonearm. My tonearm lacks any way to measure the height, so I used playing cards as shims to gauge the height at the rear as I checked the face of the cartridge with the wooden block. After I got things level, I checked and adjusted the azimuth using the square block against the left and right sides of the cartridge body till they were perpendicular to the platter. Finally, I used a tracking angle gauge to verify the cartridge alignment.
Since any one thing can affect another, after I was done, I rechecked everything until I had everything zeroed in.
Now the cartridge was flying straight and true.
Since tracking force can affect VTA, I did all of these things with the tracking force set to the cartridge's recommended tracking force on a non spinning platter with a normal thickness record on top. To keep the record and stylus from damaging each other, I covered the record with a piece of glossy, photo weight paper. The glossy paper allowed the cartridge to drift back and forth over the surface without damaging either the stylus or record.
The last thing I did was set the antiskate using a test record till the test tones played with the least amount of distortion.
Now finally the tone of the music is correct (VTA and Azimuth affect tone) and the record plays to the end of the loudest tracks without distortion.

Yes, that also works, since like you said you are compensating for the additional height of the Digital Scale with your VTA.  I have also done it that way in the past.  I, however, don't do it that way anymore, because I find it difficult to compensate exactly with the VTA, it is really eye balling it.  The purpose for 2, is you don't have to make the VTA adjustments, because the platform of your digital scale will be exactly the height of the record.  when you look across the record, from the other side, then you should see the stylus resting on the Digital Scale platform, just like it was on the record.  That is when you know it is perfect.  I believe you can be much more accurate that way, then adjusting VTA to compensate, because it is a little more imprecise trying to eyeball that

The geometry of the dynavector 20X2L looks very similar to my Grado Sonata1. I don't understand how your method square's the thing up to the record surface. Eyeballing the face and sides of the cartridge till they were flush with the square block was rather simple. Adding or removing a playing card shim was a simple way to listen and adjust.