Before you by-passed it, did you happen to check the inverter operation, not pass-through but the actual INVERT function?
I believe that the Magnum MS2012 is a single-in/single-out inverter, if that is so, it only uses L1 to power the inverter itself (charger function) and to pass-through. If the incoming L1 is dead your inverter will only function in the ‘INVERT’ mode (no pass-through, no charger).
I think that your Surge Guard is suspect, have you checked all the terminals inside of it? I can attach an image of the internals if you don’t already have one.