Well it sounds like the signal is not getting to the CIM which would tell me there is a misconfiguration someplace (XSP or M1), the XSP is bad (unlikely) or the signal is not getting sent to the XSP.
So to start over (sorry about some repetitive basics), the dips S5-S8 are 1101 which is Up (toward top of board), Up, Down (toward RS232 connector), Up. JP3 is RS232 (left). The same network address that is used in UPStart is set in Globals G29-G42.
Ok, as for the lighting - they are defined in Automation > Lighting such that whatever number your UPB device is, it goes next to the corresponding number (ignoring the letter codes). It needs to be in the range 1 - 192 (193 and up are for links). Then you have serial expander, and Dimmer or On/off.
Ok, so the next thing is how are you initiating control? Did you create a rule and are using the test button? Created a rule and then executing it? Running ElkRM or the XEP java client? The easiest thing is probably to just build a rule (whether useful or not) where the whenever is whatever you choose and the THEN put TOGGLE the correct light #. Then save/send to controller and hit the test button.
The CIM should buzz and the light should toggle states.