I have been using the AT 440ML cartridge successfully with the SH-400 and the JVC 4-DD5 which is in-line now. The JVC is not showing any playback problems.This is interesting. I'm having almost the same issue with my SH-400. I'm using - believe it or not - an AudioTechnica eliptical stylus w/ matching cartridge and it gets BETTER CD-4 results than my Ed Saunders Shibata/Cartridge.
Regardless, I get the same odd readings from the dial on my SH-400. I've found that decreasing carrier level on both channels clears up much of the distortion while still giving excellent separation.
I have a funny feeling that the dial on the SH-400 is calibrated more for it's matching cartridge and is pretty much rendered moot (or unreliable) with any other cartridge.
I don't think the problem is cartridge related. The 440ML is not a Shibata. If memory serves there is another member that has the SH-400, uses the 440ML, and is not having set-up problems.