There's probably nothing wrong with the O2. The OP is running his O2 directly out of his headphone jack on his laptop, double amping with his noisy laptop sound card and amp. He's stated too that it's a loud headphone jack with a high power rating, so the O2 probably isn't all that much louder either. So he's amping the same signal again with the O2, meaning it can't sound any better and could only sound worse.
This is a classic example of someone not knowing how to use a product correctly, then blaming the product for their lack of results and condemning it as a waste of money. What's unique about it is that most people would try something different and follow the advise of others on a thread like this, whereas op. Would rather continue to use he O2 improperly and continue to receive poor results.
Actually, putting an O2 or similar in line with a laptop's built in headphone jack can improve sound, depending on the details of the configuration. If you are driving low-impedance headphones and the output of the headphone jack distorts with high(ish) current, putting a headphone amp in series between the jack and the headphones could substantially improve matters, since it will look like a high impedance (easier to drive) load to the headphone jack, and it should have no problem at all driving the low impedance headphones. On the other hand, if the headphone jack is outputting poor quality sound independent of the presence of a low impedance load, adding the headphone amp really won't help matters at all.