Found the problem with the driver circuit. The gain was a little too high. The amp didn't like the signal getting that close to the rail. I dropped the gain about 10% and it works much better.

Now I am looking at the input circuits. I have a first order RC high pass filter to block voices and 60 Hz hum. It appears to be picking up a lot noise and it is having trouble isolating the 40KHz signal reliably. I think I will experiment with a LC filter.