Originally Posted by rockfordroo
Turn the 3-way valve in the hot (red) line (the white one with the blue line at the top and the two red lines on the left and right) so the handle is in line with the red line (probably left towards the WH, but it could go towards the right.) Also turn the 2-way valve in the cold line (blue) so the handle is in line with the blue lines.
I edited your pic to point to the valves rockfordroo is explaining. I have arrows pointing at the two valves.
For normal use, you want the valve on the bottom cold water line (blue line) to be open so water can enter the tank...which is usually the valve handle parallel with the line.
You also then want the bypass valve at the top, which connects the cold water blue line to the hot water red line, to be open only to the red hot water line exiting the tank.....which will require the handle on it to be parallel with the red line. (it's currently parallel with the blue crossover line, and thus bypassing the water heater tank for winterization. No hot water can exit the tank with the valve in it's current configuration, even if you have the valve on the bottom open going into the tank)