Originally Posted by CampingDixieDogs
Thank you!!!! It's the little stuff that gets you! It has been set like the second one the whole time.
That'll definitely affect your hot water temp.
As you can tell just from the piping colors, with that bypass valve open, it's allowing cold water/blue to go straight into the hot water/red piping. So you are getting cold water mixed all in with your hot water, before it get's to your taps.......... as you already have experienced. I bet you notice a big temperature change now when you set the valve correct.