CaptainNeo , I just finished my Grand Prix restore and I had to troubleshoot the player unit so it (the nightmare) is still fresh in my mind.
(1) It should reset to player 1. You can manually trigger this with the reset coil on the unit.
(2) It will only move 3 notches on the unit (p1, p2, p3 and p4) 3-notches because the start position is p1
When you start a game, does it start in P1 or P2?
Are you able to queue up a 4 player game?