I have never used or even seen it before, but it might have like a signal sensor or something. Try making sure that whatever you're using is already plugged in and turned on before you try switching to it. Other than that I don't know.
After spending 90 minutes on the phone and 3 levels of support with Kenwood it has been determined that Hyundai has reprogrammed these unit after purchase from Kenwood. The Aux-In is actually reprogrammed as an output. The easiest solution is to purchase a $30 adapter (as so many have) and go through the cd changer. Mine also says Aux Ext when plugged in. I was just hoping to use cables that already had a designation as Aux input. You can only enable the Aux In on a standard EZ500, not the EZ500/H3.