Bernie - When connected to In1, the touchscreen on the SD40 will not change voices. You need to send a program change via MIDI. In comparison, when connected to In2, the SD40 touch screen will change the voices (or respond to program changes via MIDI). The default GM MIDI map is a 1-1 mapping of all the channels. So ch1 from your controller is going to channel 1 on the In1 port of the SD40. Channel 1 on In2 of the SD40 is an entirely different connection and your second controller can send on 1 (if needed) or any other channel. I would suggest using the Global channel on In2 to make things easy to control the arranger section, and that will also by default give you a split point. Does that help with understanding what the 40 is (or not) doing?

Ah - Wait, I missed the USB part of your comment. I'll have to fire my unit up and look at what you can do with USB. I don't use that connection.