When using the SQI/SQO instructions it is usually very beneficial to have some design documents to work with.
If you are comfortable with excel and using DDE/OPC links, you can set up a workbook to connect with your sequencer(s) and view/edit the actual data in the sequencer.
Also, there are a lot of different ways to control the behavior of the sequence step. Typically, when using the SQI as a step conditioner, you'll have it directly control the step number and it will step forward one step at a time. Sometimes, you'll need the ability to jump to a particular step for certain conditions. There are a bunch of different ways to acheive this.
As for diagnostics, once you understand the logic, and if the SQI function is used in a pure form, it is really easy to create a diagnostic word to show what the sequence is "waiting for" at any point in time.
Here is an example using RSLogix500. I didn't use the SQI/SQO pair because they can be limiting, but the example includes a workbook so you can take it apart and see how the bits and pieces are read/written to/from excel. By using MEQ and MVM with indirection, I basically have the same thing as the SQO/SQI pair except that the step number control is done with separate instructions, so I have more flexibility.
http://forums.mrplc.com/index.php?app=downloads&showfile=854
I have worked with some sequencers that have the next step number as part of the output so that the order of steps can be rearranged by simple writing a new value to that number.
I have also worked with sequencers that use one of the output bits as a "skip step" condition. My example in the link above has a LBL but doesn't have the JMP to properly implement that feature. By doing this, you can put every possible step for every machine function your machine needs in the sequence, and then just put a "1" in the Skip Step column for those steps you don't need for a particular production run.