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I've seen dozens of these installs over the years...they may vary in equipment but all use the potable hot water heater as the heat source.The Rinnai tankless connects to the Heat Box for mixing and distribution. In this case, the mixed temp was trying to heat (1) fan coil unit in the basement and (3) loops of staple-up without plates on the upper level. The thermostat for the Basement was installed 3 feet directly above the FCU. Shall we say short-cycle? Non-barrier AquaPex was used for all distribution. The setup requires an RPZ backflow device, but none was installed.
FYI, I refused to do any work on the system, unless it was replacement. I referred the owner to the local Rinnai rep as I don't want the liability for this system working correctly.