Hi! Yes, I am very familiar with the problem. I bought one of these - it was locked on channel 43, and I intended to repair it. However, I found the problem was not so simple and it took me 6 months of research to sort out the problem. I am now considering offering a rebuild service on the controller boards for these sets. You would have to be able to remove the controller and send it to me, or have a local TV shop remove it and send it for repair. Let me know if this is of interest.
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If you satellite is HD don't connect it to either port, Use an HDMI or component (5 wire cable) so as to receive high def signals. If you must uase channel 3, You want the ATV input. On channel 3 YOU WILL NOT RECEIVE HD PROGRAMMING> check your hookup guide from Dish network.
Unfortunately the ILO TVs aren't a good investment. If you just purchased the television, I would return it as soon as possible and purchase a more reliable and well known brand. ILO support services is almost non-existant and there are several comments on other blogs regarding the Ilo brand. I have two ILO 26" HD, which I purchased in Aug '06 and am now beginning to experience problems.
I had the same problem trying to program my satellite remote to work with the ILO tv. I found that the emerson codes DO work. Yes local cable remotes will work as long as you have the code and the brand is getting more popular. The code that worked with both cable companys, Charter and DirecTv was 10171 I believe. You can find it under the Emerson codes. Hope this was helpful.