Microphone troubleshooting/wiring question

Trying to trouble-shoot a xmit problem I'm having in my ASW-19 and I think we're narrowing the issue to the 30+ year old Peiker TM169 mic I'm using. The radio itself is no beauty being the same age Avionic Dittel ATR720, but according to the radio shop it puts out a full 5 watts.

The complaint is when I xmit, my voice is so garbled as to be unintelligible...others flying with me say it sounds as if I'm overmodulated. The mic gain on this old radio is (according to the manual) a 2 position pot, either fully "carbon" or fully "dynamic" with no mid setting. When set to carbon, nothing comes out of the set at all..when on dynamic the above mentioned complaint occurs.

Now the wiring schematic says the shield wire is run separately to its own ground, but as it sits now it's wired into the radio ground. A call to one of the soaring merchants revealed that wiring it that way (radio ground)is his recommendation as well.

So....comments on what to really do with the shield wire as well as any experiences with mic failures would be appreciated. I hate to just start throwing parts at something without finding out what's broken first. What goes bad on a mic..the internal diaphragm or is it something else?

Also, I have a buddy with an oscilloscope, if someone knows a way of testing the mic as it sits in the aircraft (we've already ohm'ed it out and it's fine) using his scope then that info would be appreciated as well.

TIA for any info,

Rob S.
ZAP