I disconnected AC2 ... turn the Generator Start menu to ON, AC2 will flash without any incoming current. Then I get the Input Relay Failure error, and the inverter shuts off.
Umm, if AC2 is disconnected, then there is no way for the generator start system to work properly. The AC2 LED flashes while the starting system timers are operating (unlike the AC1 LED which will only flash when there is ~120VAC present on the AC1 input). Once the start signal has been sent, if the voltage does not begin to rise on the AC2 input, the start attempt is aborted and an error results.
To eliminate any other sources of trouble during testing of the generator start features, disconnect the AC1 input and wire the generator output breaker directly to the AC2 input with no intervening equipment.