Ok, so I was able to work when I chose the "Member Down" option and then unplugging the ethernet wire. I just assumed that when I chose "Packet loss & High Latency" option that it would still work with the ethernet unplugged because technically an unplugged ethernet wire is 100% packet loss. Ah well, it's working now so that's solved.
BUT, the only thing that does not work with failover is, dun dun dun, the Server! It works fine with the Tier 1 internet, but fails with the Tier 2 internet. I dunno why. I went to Firewall: Rules and changed the default gateway to the Failover one. So any other ideas?
Update: Ha, solved that. All I had to do was add another NAT rule (DUHHH!) since it's on the OPT1 interface. Wow, happy day today. Just hope everything stays working fingers crossed…for a few seconds cause I need to eat ;D :D
So this can be marked as solved, yay!