There has been a development on the Hornby site where someone has finally got two Hornby Select DCC units to work together. It has taken nearly 4 months to figure this out, but anyway...
It seems that twisted cabling is the solution.
Using RJ12 connectors, you should use Cat 5 Ethernet cable with 6 twisted pairs.
The outer two pins of the RJ12 shouldn't have any affect on the XpressNet as the spec only uses the pins 2 to 5.
RJ12 and cable
What has been the problem:
Standard RJ12 to RJ12 is straight cable. Quite often telephone cable is straight and not twisted. On my old Arnold DCC system, they do suggest to twist the A and B wires of the LMAB XpressNet BUS, with 20 twists per meter
. The A and B wires are the two middle signal wires.
In the image below, the A and B wires are twisted and the L and M wires are twisted.
Arnold LMAB XBUS
XpressNet doesn't really call for twisted pairs when connecting devices together as far as I know (my Lenz unit uses straight cabling). the older XBUS did though, so it seems that the Hornby DCC engineers have perhaps borrowed some older technologies. XBUS perhaps?
If Hornby is using an XBUS between Select units, they should have know about this from the start as they acquired Arnold as part of the Lima group in 2004... ;-)
If Hornby can please clarify on what exactly is going on here, I'll gladly put the info up.