Two different screw on Delta spouts with diverters have been tried and both leak only when the diverter is lifted, at the threaded end of the fitting that attaches to the spout (both at the juncture to the tile in front of the fitting, and along the fitting in the wall (where there is panel access). Leak is a slow drip, but if the diverter stays up for any length of time (such as long enough to run a tub) it leaks back along the tub and into a ceiling space... this is a big problem!

Did you put any teflon tape or pipe dope on the threads of the nipple?

In addition to the tape check the solder joint on the threaded adapter. Outside of the treads that's about all that's left. Good luck, Tom

Instructions clearly say no dope. Teflon tape was used.
It is definitely not the solder joint.
Only leaks when diverter lifted.

it is definitely not the solder joint And you know this ho?

Only leaks when diverter lifted. You just proved my point. When water runs out of the spout there's no back pressure on the joint. As soon as you lift the diverter it puts back pressure on the solder joint. What else is there to leak It can leak through the threads or the solder joint. Take your pick. Door#1 or door#2? Cheers, Tom