The amplitude of the sine will always be somewhat less than the amplitude of the PWM signal because the PWM duty cycle is not permitted to to to 0% or 100%. For example suppose the PWM signal has an amplitude of 10 volts. If the duty cycle range was 10% to 90%, the maximum sine amplitude would be about 8 volts (10 V * 90% - 10 V * 10%).
The distortion could be due to a number of causes. The inputs sine to PWM conversion is a form of digitizing so the Nyquist criterion applies. The bandwidth and fidelity of the amplifiers and speed of the comparators can introduce errors. The output filtering is also significant.
If you can describe your system in more specific detail, someone may be able to offer sugestions.
Lynn