System is connected with the pipework, by the look of it, but some of the workmanship is questionable. Mix of copper and plastic, and the Pressure relief for the cylinder doesn't look very substantial. This is a critical safety device, and only operates under fault conditions, but if/when it does, chances are it will be discharging steam and/or boiling water, so needs to be capable of handling the same, and not dump it through the ceiling below....
HW issue I would suspect is an electrical problem. If it's not been wired up correctly, then that could be the cause of your problems. The motorised valve needs to operate on a signal from the cylinder stat, once the valve powers open it triggers a microswitch to power up the boiler and pump.
Stat on the boiler adjusts the temperature of the water leaving the boiler, it wont directly affect the hot water temperature. This is controlled by a separate stat on the Megaflo, which as said previously, needs to be set around the 60deg C mark to prevent Legionella bacteria from forming.