Sorry again John for not communicating effectively, and that you're spending so much time on this, probably chasing after something you're hearing, but it's not the same thing I'm talking about.
I've created a sample of a very short (8 seconds) acoustic guitar performance, and then copied it twice, then time stretched the 2nd copy by 25%. I used what I consider to be a pretty good tool (SoundForge 10 Pro - Process - Time - Time Stretch), but perhaps not the best. Hopefully this will isolate exactly what I'm talking about.
http://www.youtube.com/watch?v=-hwAENu-Hic The 2nd copy shows exactly the audio distortion (flutter) that I'm hearing on the sample you used in your song at 1:05, and again later in the song.