AAC issue - software problem or defective hardware?!

I experienced the same issue with a purchased iTunes song.  I tried deleting the song from the Clip Zip several times and retransferring.  The song messed up in the same exact position every time.  I have not tried changing the USB mode.

In contrast, this same song plays perfectly on my computer and smartphone.

I fixed it by transcoding it into MP3 320kbps.  I know, that’s not solving the root cause, but it made the song play correctly.