You can check if it (the 3 position, or mid position valve) is working by getting SWMBO to turn the heating on and off via the thermostat of time clock. Same with the water at the time-clock. You should see the lever move. If it doesn't then the actuator is possibly broken (a not uncommon fault).
With a 3 position valve, when the water and heating are on, the flow of hot water from the radiator is split - some to the heating, some the the hot water coil. This may slow down the rate at which your hot water heats up, though ultimately if should still reach the set temperature. Maybe off-setting the stary up times would help, or even raising the boiler stat temperature.
We have a two channel time clock and two separate 2-way valves, rather than a mid (3) position. That way we can (should we want) have heating without hot water - for instance if we're away - but then again the cost of heating hot water is minimal compared to the cost of heating central heating radiators.