As far as I can see, there is a form of Noise Blanker implemented into the SX-117.

Two silicon diodes, polarised by the signal from the last IF amp that de-sensitizes the input directly at the antenna connexion.

Maybe the two diodes (CR1 and CR2) are busted….

And that the antenna signal is shorted when the “NL” is activated…

Look at the schematic.

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73, Jacques, VE2JFE in Montreal

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Clarify a little, do you mean a desired signal falls off that much
or background noise? If its a desired signal it sounds like the blanker
is blanking or blocking the signal all the time. A noise blanker is
supposed to cut or blank the signal path for short periods to eliminate
the effect of impulse noise, like ignition noise. Mostly to prevent it
from activating the AVC and desensitizing the receiver. Don't know how
its arranged in the SX-117 but it sounds like its blanking all the time.