What's the rest of your setup? You can't get distortion from the HU using tracks 1&2? Or you're just not getting it from the amp after finding the HU distortion point?
HU is a AVH270, Amp is a NVX JAD 1200.1. Sub is a Sundown SA-15 D2 wired to 1 Ohm. I distort on the HU at 38(40Hz track 1) 39(1kHz track 2) so max clean volume is 37. I hook into the amp's speaker outputs respectively with the sub sonic filter set to the lowest(20Hz) and the low pass filter set to the highest(320Hz), I can max the gain out with the HU set to the max clean volume (37) with the 40Hz -5 dB tone. I get the signal light and the 40Hz light but never a distortion light. it flickers like the OP stated sometimes but goes away without touching the gain. I've done three other system with the dd-1 and actually just did a forth today. Of course they had different equipment but it should still work on mine.