@justjed-
ahh..thanks. I suppose that WOULD help people follow the diagram easier. (I can make changes...np)
here is updated diagram...

showing a legend for PIN-OUT on the lm386 and the 10uF cap added for GAIN
@runaway_pancake-
some of it makes sense.. like over-driving.. makes the audio go 'crap' (clipping/distortion)
Im trying tp understand what it is I shoudl do from your comments..
1.) add a 1.2k resistor to the 10uF cap I added to the GAIN... yes? (does it matter what side I put it on? + or - side of the cap?)
2.) add a 0.1uF cap to pin 7 (bypass pin) to GND...
correct?
anyone care to help educate me about how to define or figure out anything about the signal BEFORE it goes to the amp/LM386?
was a comment about signal integrity BEFORE it goes there.. but I wouldnt have any clue on that.
a quick background on the sound INPUT (SND out from the PIC chip)..
I am using a PIC24FJ chip.. flashed with an API of some sorts to let noobs write generic code based on the API/instruction set.. (this 'code goes on .txt file on SD card..which is then loaded into the PIC chip upon powering it up)..
this is not mine.. I have no control over it..
however it has an EASY API to use..for doing simple things like PWM and playing audio..etc.. ( a very simple and generic platform)..
the PIC chip itself.. (somehow) outputs Audio on its set pin(s)... this is what I am trying to use/tap so I can output to a speaker..etc..
anyways.. thanks you guys for the replies so far.. and understanding that not everyone has the skill sets you may have become accustomed to! =)