P25 (Digital XT) is the correct system type to use for one of the P2 scanners. Don't change the site or system type.
Mot Type II/P25 was the correct system type to use for the original 396T. Beginning with the 396XT, and the P2 series scanners (996P2 & 325P2), you need to use the P25 (Digital XT) type.
FreeSCAN still imports these as Mot Type II/P25, but that's incorrect for the XT & P2 scanners.
There's no upgrade that you need to add. The "$75 upgrade" (that's what many of the dealers charge, but direct from Uniden it's $60) would be for DMR. The dealer may charge $75 as well for the ProVoice and NXDN upgrades, but these are about $50 each direct from Uniden. And neither of these would help for MARCS.
The system you are dealing with is P25, not DMR or one of the other types. The scanner is capable of handling P25 systems out of the box, no upgrades needed.
Your most likely issue is Simulcast. As I wrote in Post 3 above, and others have mentioned, there are limited paths to deal with Simulcast. One of them may work for some people, but for others, there's really nothing you can do. As also noted, simulcast is extremely location specific. Moving the scanner around in your house, you can occasionally find a 'sweet spot' that works. But that's a shot in the dark.
Try a stubby antenna like what wtp posted. Or collapse the extendable antenna that came with the scanner, and/or maybe lay it flat instead of vertical. Franky, looking at Fairborn's location relative to the sites, I'd try the proverbial baking plan or cookie sheet placed long the side of the scanner that faces south, That would block out the two sites a short distance south of you, as well as three more further to your south. Blocking off that side might make enough of a difference that the site to your east, slightly below Yellow Springs on the map I posted, can come in strong enough to mitigate the problem.
The final confirmation (though not workable at home) would be to set the scanner in your car or truck, running it off the DC power cables that came with it. Drive very close to one of the sites, by close, I mean something in the quarter mile range if possible. If your scanner then works with the strong signal from that one site overriding the others, then you've confirmed the issue is simulcast, not something with your scanner. There's no way to 'program out' simulcast. All of the transmit sites carry the exact same radio traffic, on the same frequency, at the same tome, as all of the other transmitters.
