Hi, sorry to hear about this - there is no detailed explanation because this is supposed to "just work". The LED means that data comes in, but for some reason is not parsed. To rule out accidentally changed settings, can you try to clear all with 4321-SET, power cycle, then run this again?
The receiving and transmitting MIDI channel is always "1", this will be configurable later, the option is reserved in settings menu and also mentioned in the leaflet, but I haven't had time to expand this bit yet.
The "test" channels output data to the serial debug console, you can try to
connect to it with PuTTY and it might actually tell you something useful as you would see hexadecimal bytes and then we can figure out what they represent, or you will see nothing, which will also give us a clue.
This was of course tested in every unit (I'm using Modal Craft Synth 2.0 as a source and receiver for these tests) and the faintly blinking LED light means that there is nothing wrong with cables, signal comes in and the polarity is the correct one of the two MIDI standards. Theoretically it could still be a hidden fault somewhere between MIDI optocoupler and CPU, maybe a cold junction that felt apart due to vibrations in transport, but that would be surprising as this rarely ever happens at all.
If you power the unit on, clear settings, then run channel 1, then press a few MIDI keys - you should see "keyboard" LEDs ligting up, that's exactly the test I am running just before packing each unit - if you cannot get the same result this would mean that something has indeed changed with the unit.