Well finally this issue may get resolved today. I'm getting some help from ShoreTels escalation engineer. He has seen this problem before and he calls it audio clipping because of Echo (ERL). (I called it half duplex). He thinks the issue is with the DSPs in the ST PBX switch not having the ability to correct the echo (ERL) from the CO. Usually this happens out in rual areas where the CO is miles away from the customer.
The only confusing thing is that the CO is 300 feet from the customer. I have to install a couple of patch files on the switch to correct this issue, I will let you all know if that was the problem. What does ERL stand for anyway??