Below: The CAE/MXR Boost/Line Driver.

The pedal itself worked fine in bypass but once engaged, the signal dropped way below unity and the Boost control had no effect. The status LED also failed to turn on.
Below: The solder side of the PCB.

Poking around with the DMM and with the aid of the schematic that I found online (see below), I quickly discovered that voltage on the gates of the P-channel Jfets was not enough to meet the Gate-Source cut-off threshold. The J177 need between 0.8-2.25-volts to pinch-off the Drain from the Source. I was measuring 0.2-volts.
Below: The component side of the PCB.

Since the LED wasn't turning on, I started by pulling the transistor in the LED driving part of the bypass circuit to test and quickly discovered it was faulty.
Below: The schematic of the pedal with the component at fault circled.

(Image courtesy of https://www.freestompboxes.org).
Once replaced, everything came to life. And the voltage at the gates of the Jfets now measured 7.1-volts. More than enough to reach the required cut-off voltage. And after a squirt of DeOxIT into the Boost pot, everything was working A-Okay.
Since the Jfets weren't able to pinch-off fully due to the inadequate voltage (imagine bending a garden hose. Once bent, water stops flowing and when the kink is taken out of the hose, the water flows again. It is the same principle, the voltage acts as the amount of kink in the hose, the water is the signal, and the hose is our Jfet), the guitar signal was leaking to the ground as was the power needed to illuminate the status LED. Hence, the degraded guitar signal we experienced and lack of status LED when the effect was engaged.
The bypass scheme is more elaborate than the boost circuit. And a good explanation of how it works can be found in the link below:
http://electric-canary.com/mxr-bypass.html
This example differs slightly from the version found in this pedal but the principle is pretty much the same. The latest revisions (Revision F) of the MXR Phase 90 uses this scheme with a couple of values changed.
~ Blake.