Yes I'm positive the Denecke Sync Box is set to 23.976. I triple checked the setting and also when I jam the TS-C slate, it shows 23 on the user bit. When I change the Sync Box to 29.97 and jams the TS-C, it shows 29 on the user bit. So the Sync box is outputting 23.976.

What puzzles me is that the HD-P2 is taking a cross jam just fine but will not sync to 23.976. The timecode field is set to LTC. I tried setting the clock source to LTC as well and still won't take the 23.976 code. It takes the code just fine when I set the rate of the HD-P2 to 29.97.

Grasping at straws here: have you got version 1.05 of the firmware?

Forgot to mention, yes I am on the latest firmware 1.05. :(

This is puzzling. Try connecting everything up and then do Menu > System Menu > Audio Clock Information. You should see
Sample Rate [LTC] 48.000 kHz
BNC Input [No Signal]
S/PDIF [No Signal]
LTC[23.976] 23.976
measured rate 23.98

If you press the time code button you should see slow flashing. If all this happens and the HD-P2 won't record then there must be something amiss with the unit itself (though I would be darn sure I had every i dotted and t crossed before I sent it in for service.) If the LTC field reads [No Signal] and the led on the time code button flashes rapidly (when button is pressed) then the signal is not reaching or is not being decoded properly by the recorder. In this case check cables and signal amplitude and/or try another timecode source (such as a camera or a recording of timecode from the generator).

These days manuals are very cryptic and it may take hours of frustrated fiddling to get things to work properly and sometimes things just do not work as advertised. For example, the HD-P2 would not reliably start or stop in triggered mode when T/C advance started and stopped. That was fixed in 1.05 but I certainly wasted a lot of time trying to get it to work under the previous version.