MIKE101, the very first pic in the thread is somewhat of an anomaly if I am seeing it right. It has all flows open. what happens in this pic is the water heater will heat water but you will have cold water mixing with the hot on the output side (so cold will mx with hot to the tap resulting in what makes you think the water heater is not working properly). To your question as to what does this represent, it represents an incorrect set up.
Follow the colored diagrams in the second post, the pic in the second post is correct. But, take a look at the diagrams again, not all the valves are the same, in summer operation (non-winterized) they are not all flat as you say and the opposite for winter. For summer (normal operation) the hot and cold are open and the bypass valve (center valve in the diagram) is closed, for winterization the hot and cold valves are closed and the bypass is open.
Hope this helps
2015 Forest River EVO 2850
2012 Dodge Ram 2500 6.7 Cummins
Yamaha 2k x 2 with parallel cable
EMS 30 PI portable w/ Edison plug
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