I am using Winamp plugin version. I am not sure if this happens with ALL quad channel media but I am using the Snesamp plugin specifically with the channels option set to Quad (basically it pans reverb and other special effects to back two channels). Anyway, when multi-band is enabled with this setting, I get MASSIVE distortion and not only that but when I go play a stereo file (say an mp3 of some song), the distortion persists until I disable and re-enable Stereo Tool. If I have multi-band off and play the quad channel audio, there is no distortion at all so I have narrowed it down to that particular feature. Likewise, if I change Snesamp to output in Stereo mode, there is no distortion either.
Here is the Snesamp plugin:
http://alpha-ii.com/Download/Main.html
You can find something to test this with here:
http://snesmusic.org/v2/
This never happened with previous versions of Stereo tool (e.g. the 6.x.x series).