Pretty much the same problem here.  Took posession of it on Friday and now Monday it started acting up.  Mainly switching from pickups to models.  I was able to restore the firmware but no change.  Line 6 monkey recognizes it.  I do have an HD500 and it makes no difference so I don't think its the battery.  I think the switch is faulty.  It now will only play using the pickups if I remove the battery so when powered it must still think its in model mode but fails to do anything when powered.  When playing using the pickups I think only 1 or both of the single coils are working as the #1 position (humbucker) is silent when selected and there is no change when using the the other switch positions.  Interesting thing to me is that somewhere along the line of my research for this guitar I could have sworn there was a statement saying 'if the electornics fail you still have a real guitar with real pickups'.  Not so in this case.  The guitar is useless, very nice looking, excellent craftsmanship, but useless.

I'm going to send it back but I will get another.