You surely mean 8 bit PCM (without "AD") sounded horrible? ADPCM encodes differences in just 4 bits but the decoded values are in the range of 16 bits.
"ADPCM stores the value differences between two adjacent PCM samples and makes some assumptions that allow data reduction. Because of these assumptions, low frequencies are properly reproduced, but any high frequencies tend to get distorted. The distortion is easily audible in 11 kHz ADPCM files, but becomes more difficult to discern with higher sampling rates, and is virtually impossible to recognize with 44 kHz ADPCM files."
I've already linked this article and it has even more details, highly recommended.
I wrote some of those original codecs. I'm aware of what they do. :) The original SoundBlaster card was 8-bit. Creative ADPCM is 8 bit. Dialogic ADPCM -- basically every recorded sound you've ever heard over a telephone -- is 12 bit. You are correct with the modern definition but I'm talking about 20 years ago so let's not stomp on history for sake of Hacker News karma points.
The Microsoft article gets a few things wrong. The distorted sound is not due to reducing the sample rate. The distorted sound comes from taking a perfectly-good 11k file and then ADPCM compressing it. This is obviously due to throwing away information on each sample as part of the encoding process, not anything due to sample rate. (Of course it sounds better at higher sample rates. More data, more better.)
ADPCM for telephony seldom even hit 11k rates. 6000 and 8000Hz ADPCM files are common. (And nope, not 16 bit either.)
I fully agree with you re 8-bit SoundBlasters and phones. I was talking about the music recorded for CDs, 16-bits. Converting that to ADPCM was certainly not a process that was guaranteed to automatically give the good results but it was at least possible to produce reasonably good sound and save some space.
I'd be of course happy to hear something more about the work you did.