How much range do you get when testing with the aerial down?

Sounds suspiciously like a 40Mhz set that someone's tried to "pull" down to 36Mhz by retuning and, as a result, is suffering low receiver sensitivity.

Band-changing (as opposed to intra-band frequency changing) can be quite a complex operation and unless it's done very carefully you can end up with all sorts of odd things going on -- such as oscilators running at the wrong crystal overtone, etc. Such mistakes can produce a set that works on the bench-- but which is unstable or which has very limited range once tossed into the air.