One of the main problems is that the channels at the output of the first 1:12 WDM Demux are not matching the input channels of your 3:1 WDM Mux. The channel frequencies are different. Make sure the WDM_Mux’s channels are correct for the receiver side as well. Finally, I think the LED transmitter will need a higher bandwidth to cover all the channels or you might want to use White Light source.
Use the Spectrum Analyzer tool to verify everything is working!
Cheers