Microphones can only record a certain number of decibels. After that point, they start to clip and become distorted like you have found. This doesn't damage the mic (as far as I know), but does damage the audio track.
It looks like you've already found the easiest solution, of just removing recording from the room with the blaring music.
If you are worried that the mic is damaged, why don't you try recording a bit of test footage/audio in your house at normal sound levels. If that too comes out distorted, then the mic is damaged, but I suspect it will sound normal.