Fark and I just tested this on Holodeck, and everything worked fine for us, which is why we're asking for more information here.
How many people do you have in the channel? And if you don't want to post the channel name publicly, you can send it in an in-game mail to @farktoid5000.
OrganizedPvP has the same problem. Once a person is muted, they cannot be unmuted. Opvp has over 2000 channel members, and the problem has had to be resolved by filing ingame tickets by the muted persons and channel admins.