The IF transformers in an FM set should be adjusted according to manufacturer instructions. The primary stage(s) can usually be tuned to the IF, but the discriminator typically has to be staggered a bit so that it passes a comparatively wide bandwidth. The discriminator must respond to frequency changes. The louder the intelligence, the more the incoming frequency shifts up and down. If the bandwidth of the IF circuitry is too narrow, it won't respond to wide frequency changes, and so loud passages will distort.
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For starters check all resistors for drifting (disconnect one lead of resistor in question when necessary). Check voltages. Check coils for proper continuity. Check for shorts across individual coils (windings). Check for shorts between coils (from one coil to another). Check tubes. Check oscillator circuit. Check band switch. Try injecting the intermediate frequency into the intermediate frequency circuit as I mentioned before. Be sure to hook an antenna to the FM front end. If you absolutely cannot find faults, inject IF frequency into IF circuitry. Adjust IF transformers for maximum tone in speaker. Then follow instructions given by Philco (you can find them on this site under Resources). A sweep generator is preferred, though you can probably hear the tone of a regular signal generator (I usually do).
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