If you set the power to "leave this device on all the time" then it won't send any power commands at all. That's how most people handle DVRs. But most don't really shut off completely anyway - they just turn off the output but keep recording internally. Which one do you have?

Doesn't matter if you have toggles or discretes - the harmony will handle both.

I don't understand why you think the settings aren't working. If the set top box is on and you start the watch TV activity and it's still on - then it's working. Once you turn it on it should stay on and if you turn it off it should stay off. Easy to test.

The remote won't send commands when you're not touching it.