Following on from How can I remove calcium deposits from a drain it looks like my water softener may not be working. How do I measure how hard my water is?
Water Softener – How to Measure Water Hardness
water-softener
Related Solutions
I only see one valve, incorrectly installed in the wall cavity at that, so there is no way to bypass the softener for maintenance or if a component fails. So no, its not installed correctly because a bypass is a standard part of any softener installation.
Without a bypass you are going to find that those cheap plastic components they make water softeners with are going to eventually fail and it will spring a leak. Hopefully the incorrectly installed valve you have now comes before the water reaches the unit. Then you'll at least be able to shut the water off from right there and not at the curb. However you'll then be without water in the house until you fix whatever issue your having with the softener. Below is a diagram of a standard bypass setup which your manual should also have.
With those valve handles in that position, yes, this should shut off the water to your house.
Sounds like you have some misconfigured plumbing somewhere. Trace the plumbing from where it enters your house from the utility and make sure that its first (and only) stop is the water softener.
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Best Answer
Home improvement stores typically carry test kits. I've found them right by water filters and water softeners. They usually are small paper strips that change color based on levels of hardness. The kit will also come with a legend to allow you to compare the strips.