First thing to check is to make sure you are using one of the "OSD" video outputs. If you are using composite video (single RCA) or S-Video, make sure they are plugged into the top outputs with "OSD" printed next to them. If you are using the 3-RCA Component video outputs, the On Screen menu will only work if the unit is displaying video from an interlaced source. If you are currently playing progressive video, the OSD will not appear.
That being said, I used to have a Krell HTS 7.1 for many years, which was made at the same time your Showcase processor was. It was great, but at a certain point the On Screen menu would just fail to appear anymore. I just assumed this was due to stuff breaking in an aging unit. I did reset to factory defaults and ended up having to manually set individual speaker volumes using the remote. The remote has buttons for "Cntr" / "Rear" / "Sub". You can click one of these buttons and adjust the volume for that speaker manually. The downside is that you have to do this everytime you turn the unit on. I lived with this for a couple years before I got a new processor, as it did not seem worth it to me to send into Krell for a potentially expensive repair job.
If my steps in the first paragraph above did not solve your problems, I suspect the seller may not have been fully honest when selling this unit. If you just bought it, I would write back to him and explain to him that the on screen menu is not working on this unit and this is preventing you from using the unit at all. Be nice, as he may offer a return/refund. The repair bill from Krell (if they are able to repair at all) would probably be at least as much as you spent on this used unit anyways.