Hi James, Welcome to pinside!
If the Coin unit is correctly stepping forward only one position when you set up for a two player game, this is the part of the circuit that controls whether the Player unit is stepping for a 1/2/3 or 4 player game. Most likely the Coin unit disk or wipers are dirty or there could be a broken connection.
Inspect and diagnose this circuit with Alligator clip jumper wires
http://www.planetimming.com/Pinball/troubleshooting/EM%20Troubleshooting.pdf
http://www.pinrepair.com/em/index3.htm#features