Both decks can play through tape 1 when hooked up to 1. Neither plays through tape 2.
Faulty relay is a common culprit on vintage gears.
The tape monitor switch allows you to listen to the tape on the three-head machine while it is recording. But the regular input selector allows you to decide which source you are going to record from. That is why the tape swich is not on the regular selector switch.
If you don't have a three-head tape deck, then you will never understand the value of this very useful feature. FWIW: this feature is absent from most modern receivers due to the fact that Tape is now an obsolete medium.