You can enable to TV1 modulation there, and change the TV2 modulated channel as well (both TV1 and TV2 signals are simultaneously sent via the "home distribution" port on the receiver)
Is a diplexer or splitter needed also I will have no tv to connect to before hand via hdmi I was trying to figure out how to get it to work with cable connection first. The receiver will be installed away from the tv's.
You'll need a splitter. Simply split the signal from the home distribution port, connected one cable to TV1, the other to TV2 (diplexed if you want), make sure the modulator setup is correct (for both TV's)
If you can't get a picture on tv1 that's rather difficult. It's easier to buy a cheap rf modulator imo. Even if you use it just to turn the modulator on or get an OTA module that'll allow tv1 ch3 out.