Q: Both PC's are connected via HDMI to the KVM's input. Both monitors, are connected to the KVM's HDMI output using HDMI to HDMI cables. Why only one HDMI output works?

Because one PC needs to be connected to DisplayPort and HDMI input ports (two pairs of inputs) at the same time. If one PC is connected to an HDMI input port, then there is only one HDMI display
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