How to decrease distortion/noise of LM386 amplifier at max gain and volume?
You have put R4 in the wrong place. You have put it in series with the loudspeaker which will waste more than 50% of the available output power. It should be in series with C6 down to ground (check the datasheet). Perhaps this explains why you feel that you have a lot of distortion for a given volume level.

There are a lot of things wrong with this schematic. As drawn it simply will not work.