Its quite possible, its a ingenious but devilishly cunning device, thats why you should try all the various combinations, so suggest when its apparently in mid position, HW&CH calling, pull on that manual lever, if it is in mid position then the lever will be loose and floppy with no resistance as soon as you pull on it, if so, do 2 more tests, one, I mentioned above, "with both HW&CH selected just turn the cylinder stat right down, the valve should go fully to CH only and the boiler should remain firing, see below, also check pump on speed3." HW, Port/pipe B should then get cool after a while and the boiler should continue to fire for at least a few minutes even if only 2 rads, for whatever reason, are only heating. If the boiler doesn't continue (see below) to fire, put both HW&CH back on and simply switch off the HW at the programmer and see what happens.
Also remember that any time the valve changes position (even when working perfectly), the boiler will stop and then refire within, at the most. 10 secs or so.