Hi all,
Here's a little more in depth on how the Proto Dispatch feature works. When you have the system set to use the remote's mic here's what happens when you press and hold the mic button...
1 - A command is sent from the remote to the TIU to turn on the feature.
2 - The TIU stops processing other incoming commands.
3 - The remote starts streaming compressed digital audio from the mic.
4 - The TIU sends a command to a single engine to turn off its normal audio and start playing a digital audio stream sent via the rails.
5 - The TIU starts the audio stream on the tracks with a recording of radio "squelch" and static.
6 - The TIU relays the incoming digital audio stream from the remote onto the track while continuing to also play the static sound.
When you release the button...
7 - The remote stops streaming audio to the TIU.
8 - The remote sends a commands to the TIU to turn off Proto Dispatch.
9 - The TIU plays another clip of "squelch" that sounds like a radio mic key being released.
10 - The TIU sends a command to the engine to stop accepting the audio stream and turn its normal sounds back on.
What usually causes trouble with Proto Dispatch is getting the TIU to receive the command from the remote to turn off the feature. There's a LOT of radio traffic coming from the remote to stream the audio from the internal mic. Under normal conditions some of the digital packets carrying the audio stream are not received by the TIU's antenna. That's pretty normal in any sort of digital transmission sent via radio. What's also normal is that the more radio traffic there is coming from any source the more likely the TIU is to miss a few packets. The problem is that the command to turn off Proto Dispatch is just another digital packet that is sent immediately after the last packet of audio. With that much radio traffic it's not surprising the "off" command is frequently missed.
When you change the system setting to use the "external mic" plugged into the TIU's mic inout, steps 3 and 7 are eliminated. Instead of the remote generating a digital audio stream and sending out via radio, the TIU generates the digital audio from the "external mic" port and sends it directly to the rails. What happens on the track is exactly the same, but the amount of radio traffic flowing from the remote is GREATLY reduced. With less radio traffic the chances of the "off" command from the remote getting through to the TIU are greatly improved. That's why Proto Dispatch is far more reliable when using the external mic.
There are several different steps where things can go awry. If the "on" command is missed at step 1 by the TIU, nothing happens at the engine but you can still send commands from other remotes. If the "on" command from the TIU to engine is missed at step 4, nothing happens at the engine and you can't send commands from other remotes. If the radio reception from the remote to TIU is weak (and you're using the remote's mic) the engine will steadily play the background static sound but the audio from the mic will be choppy. If the track signal quality is low (8 or lower for this feature), the static sound and mic audio will be choppy together. If the remote's "off" command is missed by the TIU at step 8, the mic audio will cease but the engine will still play the static sound and commands will not be processed from other remotes. That's the most common point of failure and consistent with the OP's description. Failure at this step often returns the "out of RF range" error message because the remote never receives and acknowledgment from the TIU that the "off" command was received. Lastly, if everything else works but the engine doesn't receive the "off" command from the TIU at step 10, all audio playback through the engine will cease and commands can be sent from other remotes. The engine will seem to have had the volumes all turned down to zero, but making volume adjustments will have no effect.
Proto Dispatch, Proto Cast, and Custom Sounds, are the three features that put the most demand on track signal and the TIU's processor. As a result, they are the features most likely to reveal weakness in track signal. Playing audio through an engine with Proto Cast is a good alternative to using the track signal test for identifying weak spots on your layout.