Yeah sounds like the diverter valve. Hot water should take priority so if the central heatings on and you open a hot tap you should get hot water but no heating. Sounds like its getting stuck, maybe consider replacing the diverter?
I would suggest your rad valves are causing the problem. However as its been said before poor circulation could be to blame, if you check you F&E tank and see what state the waters in is a good indicator to blow healthy your system is. But more than likely your rad valves need renewing.
From what you've described the one with the arrows on is your wheel head valve which you use to adjust the heat produced by the rad and the other is your lock shield valve, which shouldn't need to be touched once set. However if its been turned off then you need to turn the spindle (or pin as...
If the flows getting hot then I would've reluctant to blame the diverter valve as it seems to be moving into position. Can you hear the diverter valve move?
How old is the system? Also have a look in the F&E tank and see what state the waters in? could be a blockage in the pipework. Unlikely...
In this setup I would recommend a 24kw glow worm flexicom, and if possible installed by a glow worm approved installer as this extends the warranty from 2 years to 5. However if your set on the vailant I wouldn't argue with that as vailant and glow worm are essentially the same boilers.
With...