Yamaha Zone 2
Yes, the receiver can run 7.1 channels and Zone 2, however, it only has 7 amp channels. 2 of the channels can be assigned to Surround Back seakers OR powered zone 2.
Wakefield,
There might be a zone 2 volume control that you need to turn up. Here is another test you could. Loop the Yamaha's Zone 2 line out back to an analog input like CD, tape, etc. to see if the zone 2 output is working.