Hi,
If you suspect the EPROM(s) are faulty, try pulling them out and reading them. The chips have their checksum values written on them. Compare values.
The Modulation rotary switch has a common +12 rail to it, check that its there.
See if the Modulation mode can be changed via RS232 control (see manual for command set).
The Modulation switch data is sent to the DVM/IO board and leads to U16 (74HC244) buffer. Make sure switch logic levels reach the pins of that chip. Note RN2 resistor network is used for GND logic low pull down.
Hope that helps.
PS, yes your particular CPU card will only accept versions below 3.0, cpu's were changed after that.