It is possible that the valve under the sink is the correct by-pass valve for the water heater but that the check valve at the hot water port on the tank is bad and when water pressure is applied water is draining out of the tank as mentioned. Quick solution would be to cap off the line going back to the water heater tank top port. Replacement of the check valve will be needed to completely repair the problem.
Mike, RVIA & RVSA Certified Master RV Technician
Amy, Dr. Assistant - Roxie & Mei Ling, four legs each
2000 Gulf Stream Scenic Cruiser 450 hp & 1330# torque
06 Saturn Vue, 06 Chevy Z71 4x4 & 2014 Corvette Z51 M7