11Dreams
Even if I'm using ARC calibration and I plug in the condenser mic I have to keep volume knob to 0 when calibrating.
Also before I realized it was a condenser mic. ha! I was able to calibrate with volume set to 0 with no phantom power on.

That is the second really strange observation (condenser mics do not produce any signal without power, by electrical circuit design... there is always some power between somehow electrically connected wires, but it can not be sufficient, even if the result is amplified by "normal" audio interface). Also confirmed from IK site:

Yes, as a condenser microphone, +48V Phantom Power is required for the ARC measurement mic.

 
So I repeat my question: are you sure that gain knobs are on zero? You call them "volume" but there are not, these are electrically control the amplification levels, before AD converters and direct monitoring mixing (for which the term "volume" make sense). Do they set all the way left (I mean not "centered")?
 
When you connect your mixer (the way the audio is not clipping), which inputs do you use?
 
When you use "direct monitoring" (using "MONITOR L/R" or "Phones" outputs, "Mix" knob all the way left and to be sure without any signal from the DAW), do you also get extremely loud signal from just one mic?
 
Is turning Gain knob changing resulting level? Separately check in "Direct monitoring" and in the recording.
 
You you using ASIO driver when recording?
 
----
Up to now, the only theoretically possible explanation (except for ARC) which comes into my mind is an internal shortcut (or a break) in the ground circuit of the unit, pulling the voltage on all gain knobs into "max". Answers on the questions can clarify that.

Have you tried turning the nobs to the opposite extreme? 
 
I remember once in a dorm room where I had the only radiator that got hotter when you turned the valve clockwise instead of counter clockwise. I obstinately froze for a while before I finally tried the reverse of the directions.

Cactus Music
Hard to believe that all 8 channels would be defective. 
Where are you setting the channel input level knob? 
And is this with different mikes or just one type? 
 

It's not 8 its all 14 channels.

gswitz
Have you tried turning the nobs to the opposite extreme? 
 
I remember once in a dorm room where I had the only radiator that got hotter when you turned the valve clockwise instead of counter clockwise. I obstinately froze for a while before I finally tried the reverse of the directions.

yea, that was not a good idea. ha!

gswitz
There's something not right, either with what you are reporting or with the device.

 
This! 
 
And how are you plugging a dynamic mike into a TRS jack on the back?  
The rear panel jacks are used for connecting a pre amp or mixer and not meant to be used with any type of mike directly. 
This brings up a question of us needing to know exactly what you are using, you imply you have tried a bunch of different mikes, is this so? 
What type of cable(s) are you using? 
Either the unit is 100% malfunctioning or this is pilot error. 
 
As I said, there is no way to overload any of the 8 XLR inputs on the front panel when using any common household mike unless you turn the gain past 10'o clock.  
 
What do you get when you plug an electric guitar or bass into Channel 9? 
 
 
 

All where xlr cables  in the front and xlr to 1/4" (adapters)  in the back.
 
 

11Dreams

Cactus Music
Hard to believe that all 8 channels would be defective. 
Where are you setting the channel input level knob? 
And is this with different mikes or just one type?

It's not 8 its all 14 channels.

Mic is saturating line input (SM58 produce -54dBu, minimal level on rear line-in is -43dBu) while mixer line output does not...  a condenser mic working without phantom power...
We are moving toward Science fiction... please do direct monitoring test I have described in my previous post.

I'm sorry  this as far as I will go with this, a lot of questions and recommendations for testing have been offered in this thread and either you didn't follow through or do not care to answer questions.  
 
I will write this off as a huge waste of my time.