American Standard diverter valve problem

I am in the process of replacing my diverter vavle. I figured its a quick job..turns out isn't (at least not for me, the rookie.) :)

Here is my issue..I can get the valve in no problem..but the valve/stem will keep turing counter clockwise, and I cant get 100% of the water to go to the spout..its about 80% to the spout and 20% still to the head.

If I turn it clock wise, it will completely seal off the head and divert 100% to the spout..but the valve/stem will keep turning...The handle is not stripped either..I replaced those as well.

I dont think there is anything else i need to replace..there is nothing in the pipe that I know that is part of this assembly.

Here is the new (top) and old (bottom) valves:
http://www.sweetgt.com/11160001_std.jpg

Here is the best pic I could take of the inside of the pipe..its kind of dim..but I dont see anything in there that should/needs to be replaced:

http://www.sweetgt.com/11160008_std.jpg

I am desperate from help..something this simple..I have wasted hours on :)

Is that a Danco replacement stem or a American Standard Genuine replacement stem.

Danco is notorious for product failure right off the shelf.

Its Kissler & Co and says "Keep It Simple System".

The thing is, is i I put the old one back in, it behaves the same way..

I figured these things would just pop right in....

From the picture, I'm not sure why you decided to replace the blamed thing.
I assume that the seating surface where you close off the spout has some sort of composition or plastic to seat against.

When you put that assembly back in make sure that it is tightened real well because if not it will slip.

The thing was leaking and i just bought the whole unit instead instead of replacing the O rings..figured while I have the wall/cover plate off Id replace it all at once to avoid redoing it...let me try tightening it up real good..i was trying to avoid over tightening..

I just made sure the valve was nice and tight in the pipe and it is..the stem still wants to turn counter clockwise like there is no stop..

The "screw" is in that bottom section, and if it is not tight in the valve body once the diverter is turned out so it contacts that piece, it will just rotate. It appears to be a Heritage diverter, and it looks like all the parts are there, according to what we can see.

So the silver "screw"/shaft needs to be tight in the brass barrel or else it will keep spinning is what you are saying?

How the heck do I tighten the barrel on the screw? I cant get a good grip on it using just my hands :)

NO! The brass barrel has to be tight in the faucet body so it will not turn when the brass stem touches it. Why yours is not doing that is something we cannot tell you from here, because we would have to work on the faucet to see what is happening inside it.

Gotcha..well I will see what i can do this weekend..thanks for the tips