I thought that I saw somewhere that if GSX2 doesn't bring up stairs no passengers visible. Is this true and if so do I need to NOT have embedded stairs checked.
Not exactly. GSX won't show passengers if you don't have a main exit defined, because it assumes the plane has no doors.
So, even if you are planning to use the Embedded stair option, which will disable GSX stairs vehicle, you must still have a main door, properly defined, with it's correct position AS IF you were going to use GSX stairs, which will be then overridden by the Embedded stair option.