Hey! Sorry it didnt work out for you. Like I said, I have done this probably 10 times and each time had to tweek it until it was right. It is still not perfect though, but it works. Sometimes I have had to invert the polarity of the guitars pickups to solve the problem you have described. Barry Sless had me put it in his guitars and he loves it, very dynamic and expressive. He gigs with them all the time and uses the loop exclusively.
A couple years ago, John Cutler, Peter Miller and myself designed and built a Pedal Version of this idea, a box with expression pedal. The box allows either a FX loop type guitar or regular guitar to be plugged in, as well as the FX. And expression pedal used to mix the wet and dry. It works great . Very amazing! Barry has one we built for him, but he prefers the Blend in the guitar, over the pedal. We ended up abandoning the project, figuring for us to build this the right way it would be to high of a retail price. At that same time this company (xotic effects) came out with the same product. Although theirs doesn't have the Expression Pedal.http://www.xotic.us/effects/x_blender/
(edit) To cure the problem your talking about, we added the Phase switch on the network box, because certain FX will invert the signals phase. The symptom is that in the middle of the rotation there is significant volume loss. SO mattering on which buffer im using, which FX are being used, and which pickups, I sometimes end up inverting the phase at the pickups (swapping the leads).
Heres a couple pics of our prototype -
Cheers and sorry again for the troubles, i wish I had a straight forward answer for you, other than swapping the phase of the guitar at the pickups. Or, try inverting the phase at the buffer, like using a different buffer. I find that stuff like this really needs tweeking until it works, thats all I can say!!