A seperator going out would not cause loss of picture. First you need to determine something specific. On the back of the receiver is a yellow coax port that says Home Distribution. Does that coax line go directly to TV2 or does it go into a "splitter".
If it is run direct to TV2 and modulating to other channels doesn't work:
1. Your TV is dead
Or
2.The coax output on the receiver is dead
If it goes into a "splitter", that is actually a diplexer. On the side with two ports one should say Sat and the other UHF/VHF. This should be exactly the same as the one outside. If not, there is your problem.
If the diplexers are the same, unsrew the cables on the one outside and check for rust or corrosion. Or it could have just died.
Post whatever you find out