THE ANSWERS
01 There are a number of factors at play here, David: first, the design of the effects loop; and, second, the design of the wah. Tackling the effects loop first, the Peavey 5150 effects loop is a series loop and sits between the preamp and the power amp. This is ideal for things such as delays and modulation, because it means any distortion you use comes before the delays and you get the clearest sound (to my ears, anyway). Another type is the parallel effects loop. In this case, the dry signal remains intact and you can choose how much of the effects in the loop to mix in with the dry signal. This sort of loop might be better if someone is adamant that they want to use the wah in the loop.
02 The perceived wisdom is that wah pedals sound best when they sit between your guitar and your amp. Obviously, ‘best’ is subjective. Tom Morello of Rage Against The Machine is known for using his wah in the effects loop and he sounded amazing – so why is your Cry Baby not sounding as you like? Well, it’s most likely due to a lack of preamp interaction. The interaction of the sweeping resonant peak filter in the wah with the preamp (especially a distorting preamp) is an important part of crafting the sound that you like. Distortion from the preamp compresses your guitar signal and, as the wah accentuates specific frequencies when in operation, these interact with the preamp distortion to produce a pleasing vowel-like sound. Without that preamp interaction and compression, there is no taming of the wah and the extreme frequencies are very pronounced. To some, this can make the wah sound like it sweeps more; to others, it can sound thin and harsh. I’m afraid you sit in the second camp and, as such, I’d recommend you place your wah before your amp’s preamp.