It's supposed to be "self-cleaning", isn't it? The whole idea of having a moving bed medium like K1 is that it's constantly churning and bouncing around and knocking off the older, weaker bacteria so that only the meanest, toughest, orneriest ones can manage to hang on and do their job!
Okay, maybe that's a bit simplistic, but I've had a bunch of this stuff for several years now. I got it as part of a package deal of stuff that was dirt cheap, so to my mind the K1 was pretty much free. It took forever to set it up just right so that it tumbled, and I keep it in place mainly because my granddaughters like to watch it. Otherwise, I think the stuff is hugely overrated. Your tank will support a given amount of beneficial bacteria, determined by the available food produced by the livestock you keep. The sump in which I placed it was already complete mature and cycled, so the K1 added a bunch more surface area but the total bacterial population didn't change, except to increase slightly as the livestock grew. It simply spread itself out a bit thinner over the larger area.
I wouldn't call mine "snow white" but it is still very clean, so there must be something to the whole idea of older bacteria being sloughed off due to the churning. And I am curious as to how exactly you think it could fail to work? The bacteria are going to grow on all surfaces available to them, whether you like it or not. They're on your K1, so the fact that it's still white tends to imply that it is doing exactly what the marketing claims, i.e. knocking off old dead bacteria rather than let them build up into a thick sludge.
So, while I do think it's mostly overblown hype and ridiculously expensive...I can't see how it isn't working. Do you have other biomedia in your sump as well as the K1? I had plenty of live biomedia before I added the K1, so I could probably ditch it now and experience nothing more than a slight ammonia blip for a day or so until the lost bacteria is replaced. If your sump has no other biomedia, removing the K1 could have a more profound negative effect for you.
When you refer to it as being in the first chamber...do you mean that the water has not been mechanically filtered when it reaches the K1? In my set-up the K1 is the final stage of filtration, not the first.