I know I am missing something here...I have a CIX 40 where they want the general MB (700) to light 3 phones.

I have a unique phantom ext. with MSG light programmed on each ext. (209 has 410, 206 has 411 and 200 has 412). I have the owner of each phantom programmed as such. I did an on and off template in MB 700 for each phantom - the variable is set to the phantom.

Not working.

I can turn on and off the phantom msg light by doing #63 or #64 and the phantom ext. so the issue is in the VM so I am told, but I cannot figure it out

What On/Off template did you use? I think you have to use the SMDI On/Off template.

You have to create a copy of the COM1 3 Digit and then edit it to use a %V instead of the %E then add the additional extension number into the variable field.
Save and add to template list.