Still haven't gotten any response from Line6. However, I've made some progress. Putting this out there for anyone else searching for assistance.
The FX Loop block in your signal chain must be changed to stereo.
I can't figure out how to change the FX Loop block to stereo using only the controls on the HX Effects device. I've gone through the manual and can't find instructions for this change. It's probably there, but it's hidden; I couldn't find it. I tried all sorts of combinations of button pushes and knob twisting, but never was successful using only the HX Effects device to convert the FX Loop block to stereo. Download the HX Edit application from the Line6 website.
In order to get the HX Edit application to work you'll first need to update the firmware on the HX Effects unit. The manual does a good job describing this process.
Once you've updated the firmware and installed the HX Edit application, changing the the FX Loop block to stereo is easy. The FX Loop block has a drop down arrow with an option to change it to stereo.
Finally, I'm still having some issues with the signal routing. Right now, I can only get the 7CM to work by putting the STEREO FX Loop block at the end of the signal chain. If I place it anywhere else in the signal chain, the preamp stage from amp#2 is bypassed and signal is routed directly to the poweramp section of amp#2. I'm not sure why. This is likely due to my limitations in understanding the signal flow. 'm going to mess with this again later and see if I can get better results. If I learn something new, or get some feedback friom Line6, I'll edit this post.
I guess not many folks are running a stereo setup. Finding information on these issues has been difficult. I specifically bought the HX Effects to ease the setup for my stereo rig. I had higher expectations from a documentation standpoint.