I just got hold of the Truma service in Elkhart and they put my mind at ease. A simple answer I should have thought out. The furnace works off the hot water and blows the heated air. When I turn on the faucet I get hot water because the furnace heats it. So when the furnace is on, so is the water heater, thus hot water. The water setting is for when you want hot water and not the furnace. Sure wish my salesman would have had a clue about this unit instead of having me figure it out blindly.
Result: Problem solved!