AllenM
I aint gonna lie AllenM... i like you. Yer a good guy i can tell.
I say definitely return that mixer. It is the worst condition m208 i have ever seen. It is worth maybe 50 bucks looking and functioning like that. I used to own an m208 but ill be honest with you, if you can find a good condition m30 you will be much happier in my opinion. Not that its better sound-wise, or that an m208 wont work well for you, im just giving you my opinion from my own experiences with that same equipment.
My honest advice would be to return that mixer, save your money while looking through craigslist etc and find a good condition Tascam M30. Dont buy one with flaws and broken stuff. Just wait for a good one. Then go meet the guy and make sure all channels work etc. Its an awesome mixer, especially if you are new to recording. I got mine off ebay a few years ago for like 130 bucks, clean as a whistle, never had 1 problem with it and i still use it. In fact sometimes i think about getting another one when i see them in good shape.
For where you are at right now, you need something that works, that is a springboard for you to learn not only what types of sounds you can get from your equipment, but more importantly "how" you like to use your equipment to get those sounds. You dont want a wonky mixer during that process.