The preset light was switching from yellow to red on its own. From a google search, I found some ideas on this forum.
I'm not an electrical engineer but the problem was grounding. Using a passive direct box with a ground lift did not solve the problem. It did however improve the sound!
On the back of the Tascam is a screw terminal labeled "ground". I bought an ac cord with the 3 wires dangling out the other end and broke off the two blades leaving the ground pin on (I'm in North America). I crimped on a little fork to the green ground wire and attached it to this screw terminal on the back. I then plugged this mutated AC plug into my power bar, thereby grounding the Tascam. It fixed the problem.
Perhaps this info will help another Tascam user out someday - but please be careful, we are dealing with electricity here. If you are not comfortable doing something like this on your own (you could damage your equipment, yourself, or both) please ask your local friendly electrical genius person. Thanks.
Happy Mooging.