Yes...looks like you have the wrong gasket. The gasket must exactly match to whatever it seats. If all but the one web (spoke) at about the 2 o'clock position seats properly you can just cut that web out.
Sorry...got interrupted by a coal delivery. Yes, I take an active role in my Winter heat. A simple check on the valve position can be to check pressure when you're in the 'recirculate' or 'bypass' setting. This bypasses the filter. Then switch to 'filter'. The pressure should be at least several psi higher on 'filter'. Something else to verify is you should not get any flow out the waste line. That should onl occur in 'backwash' and 'rinse'.
Al
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