Don't let it get you down. Playing with this guy will probably make you better quicker than being on your own.

This story my put some perspective on it: I once was playing a gig with a 3 piece band, I was the only guitarist. I kicked my cable out of my guitar by accident, but since I was singing, I couldn't go plug it back in. Nobody noticed, they just kept dancing. After the song was over, I plugged it back in. The point is that it isn't necessarily personal that they didn't notice.

About them telling you to turn it down...someone advised me recently that I should mix sound so that each instrument has it's own little territory in the sonic spectrum. So, if this guy is treble-heavy, you should go mid-bass heavy, and get him to turn down his mid-bass. Or vice versa. It will get rid of the mud in the sound. I tried it and it worked really well. Give it a shot.