Su, maybe we can try and work out what is going on, by doing this step byt step.
If you press the dvr button on remote 1( the main one) do you see a list of recorded programs. I assume so.
so if you now go back to the tv (press cancel button ) and press the record buttton and it starts recording i assume ( you see REC appear on the tv)
Now press the dvr button again. and select any previously recorded show in the list, except the top one as that is the show we just started recording. Do you see, on the tv, this older recorded show or not ?
if you do you are now recording and watching at the same time.
If you follow the same procedure with Remote 2 at the same time you will be watching 2 and recording 2.
The next step would be to use a timer instead. of the instant record, but the effect is the same.
Let us know what step seems to be failing or if i have misunderstood your issue.