it looks like you put the 'Y' pipe on the wrong side of the raw water pump. It should be placed on the intake side where the pressure will be low so that extra water flows through the heater system.
OK, someone needs to explain to me how putting the cold water supply to the heater core on the suction side of the raw water pump will provide any cold water whatsoever. It would seem that if installed that way the impeller will suck water backwards through the heater core. Also, shouldn't there be a mixer valve to mix the cold and hot water together for the right temperature?