I read that this is a semi acoustic guitar so the M is for acoustic playing.
You are sure both pickups are on in all settings (besides M of course)?
A quick test is to push a string onto each pickup, one pickup at a time. If it makes a pop when it contacts the pole, then the pickup is active.
The switches could also change the wiring to make the pickups run in series, like a humbucker; in parallel, like 2 single coils; or have something to do with phase shifting.