The pin you can see moving is indeed probably operating the flow switch. Look at the manual carefully. The domestic hot water microswitch is operating by a fulcrum arm, get someone to turn on a hot tap while you are looking at it and you will see it move.
Your constant demand problem is probably a broken DHW microswitch. It is telling the boiler to fire up for DHW, the flow switch operation is part of the proper start up sequence. Because the fulcrum arm has not moved the three port valve sends the heated water round the radiators and not through the DHW heat exchanger.
Try turning down the hot water temperature control dial, does this modulate the unwanted CH mode?. The domestic hot water microswitch is a quick and easy and cheap job to replace. It switches mains voltages though - you should be 'competent' to wire in a new one with a chocolate block or the supplied crimps after snipping out the old one.
Take a picture of the old one on your mobile to show at the spares desk - there are two different incompatible models.
c
October 2009