OK, I put in one completely spent NiMH and one charged one. I now get 1.26V on each switch setting.
So when you put the switch in the 'on' position, there is not enough voltage there to activate the boost regulator and all you are getting is the leakage voltage again?
Even then, plugging in the USB cable triggers the camera.
That seems very strange - most of the reports I have seen indicate needing to be quite a bit above 3V to trigger the camera via CHDK USB remote operation.
BTW is it normal that the remote function only works when the camera is NOT in CHDK mode?
Yes. The whole purpose of the USB remote is to let you shoot without having to physically touch the shutter button. Sort of like a cable release on the old film cameras. That the "built-in" functionality is only active when using the camera normally ( i.e. not in CHDK mode). However, when you are running a script (and thus in CHDK mode) the script can interact with the remote to control script action.