Just checking the exact ruling of the card... effect states: "Monster cards cannot be Set face-down. Monsters Set in Defense Position are Normal Summoned in face-up Defense Position."
Does this mean:
a) that monsters previously Set are flipped and "Normal Summoned" in face up Defense position?
b) that monsters cannot be Special Summoned in face-down defense position?
c) that monsters cannot be changed to face-down defense by other cards (ie. Book of Moon)?
I know that these are probably pointless questions, and the probable answers will be: no, no and no, but when I first received this card my friends and I may have been playing it wrong and here would be the best place to find out. Thank you in advance.

a) Monsters already on the field won't be affected at all, they'll remain in face-down until flipped by any other means.

b) Monsters specialed summoned in face-down position will be SS in face-up defense position instead (i.e. Apprentice Magician, Cyber Jar, Nimble Momonga etc.)

c) You CAN'T use cards like BoM whil LoI is on the field.

hope this helps

1. No, Monster's already f/d will stay f/d on the field, it's not like Swords of Revealing Light, where it specifically says to flip the monster's

2. Yes, they will have to be Normal Summoned in face-up DEF position and any special summons that would be face down DEF are put face-up DEF instead.

3. Yes, Book of Moon, Tsukuyomi, Inferno Hammer, Darkness Approaches, Swords of Concealing Light and monster's with built in "Flip down" effects cannot be activated.

These aren't really pointless questions at all. Even if they have been asked before, it's still one of the MANY cards that are debated.