Indent your code and don't forget about AND! For example: change
WHILE 1
VSYNC
IF DAY==1 THEN
IF ROOM==3 THEN
PRINT "HI"
ENDIF
ENDIF
FOR I=0 TO 9
LOCATE I,I:?I
NEXT
WEND
the generator room is the one with the two dead policemen that you found with the first key.
also there will be a button that lets you turn on the generator somewhere in that room, hope that helps.