I'm sure that you must have run the test on different a/c but I'm curious that everything is fine when you disable the squelch. That suggests that the squelch control on the rx is set too high. Come back the days when there was a little knob to twiddle, eh? If you can receive the ground station quite clearly when the squelch disabled it doesn't sound like interference on the actual frequency but maybe a strong transmission on an adjacent channel? (Hopefully one of my Tels colleagues will provide a more knowledgeable answer). The multi-carrier technique of transmitting the same channel from several stations on slightly fiffrerent frequencies (7khz if memory serves) has been employed for many, many years and should not cause this problem.
However... that said, you may be interested to know that some quite serious investigations, including flight checks, are in progress to determine the cause of loss of communications in the London area. A number of pilots have reported losing contact with ATC - and we've noticed it too (got the grey hairs to prove it). It has certainly affected one or two Heathrow frequencies but I don't know which others.
Lastly, one very serious case of QRM in the London TMA, which caused problems on certain frequencies for some time, was traced to....... yes, a baby alarm!!