how to set up a tonearm/cartridge

A few things to look at.

First double check that the arm is correctly aligned and the slot drilled in the correct place. If you can't get the arm aligned properly then you will have problems.

With the turntable off, place a mirror on the platter and the cartridge on the mirror. Is it perfectly perpendicular to the surface of the mirror?

Make sure that the platter is level.

Are you using anti-skate?

If memory serves, and correct me if I am wrong, the GME tracks at 4.0 grams. Do you have a stylus force guage to make sure that you are tracking at the correct downforce.

This sounds mostly like an anti-skate problem since the error is most noticeable on the inner grooves...

-RW-

Thanks folks for your help, I will try to find the cause of the problem, please do keep sending me more ideas on how to find the remedy.

If the distortion is mostly in one channel, try adjusting the anti-skating as follows. If distortion in left decrease A/S, if distortion in right increase A/S. If the distortion is equal in both channels then the problem is likely with the arm/cartridge alignment (use a gauge to check this) or else the tracking force may be set too low. Good luck and please let us know what you find.

Check the following:
1. Is the turntable level?
2. Is the Armboard level (when it is not original Micro Seiki)?
3. Is your adjustment right (Pivot to Spindle)
When that is all right, then you have a problem with your Arm
The 3012 can't handle all kind of cartridges, it is not really good in energy transfer (vibrations in its bearing), normally it runs well with ultra soft suspended cartridges...when nothing helps, go for a better Design, FR-64s. That Arm is a total different chapter.