Krell S-1200-U - EQ not working

I recently upgraded my Krell Showcase processor to an S-1200-U - with challenges.

The room EQ does not seem to work as it should. I hate the thin, bright sound of modern receivers. This unit has the same thin, bright sound. So did my Showcase. But the room EQ fixes that on the Showcase. But not on this new S-1200-U. The tonality of the sound never changes - just the volume. 

To test this theory I set a high-pass filter on all channels at 5k and applied it. I should hear nothing but highs. I get bass and mids and highs. I tried a few other tests and nothing works as expected.

I've tried resetting the unit. Does not fix it. I do not remember ever hearing this unit respond like it should to changes to the EQ. 

I spent a month trying to get sound from this unit on my 2 sources. I eventually solved that problem.

Upgrading a Krell should be a pleasant experience. Mine has been nothing but pain and the pain is not ending.

Should I request a refund? I cannot sell this unit on here knowing it is defective. I'd rather listen to my old Showcase than this one the way it sounds without an EQ to adjust it. 

Any ideas?