I have this same problem. I had a new tub wall insert put in. The copper supply pipe is too short. I have the second type of spout shown above. It has an Allen wrench set screw. I think what is happening is the pipe is not making it to the O ring and water is bouncing back. I can't solder a new pipe because the wall is fiberglass and might melt an ruin the whole wall insert. I have tried a second O ring and Teflon grease, but still have a terrible leak. I also tried a different spout from Home Depot, but it leaked too. Any other suggestions? Thx.

Do you have, or can you make access to the valve from the other side of the wall?

Do you have, or can you make access to the valve from the other side of the wall?

No. No rear access. I'm now trying something called a SharkBite connector, but it spins and the nipple I have is about one inch too long.

I may try to caulk the SharkBite connector so it won't spin and see if I can find a shorter nipple. I have tried two different types of slip on spouts. Both leaked.

Any suggestions appreciated.

Did you taken a file or sandcloth and burr the end of the copper so it wouldn't roll the "O" ring out of position. Here's one a lot of installers miss when they go to mount a slip on diverter spout.
When the end's cut off the copper pipe that sticks out from the tile the tubing cutter leaves a burr/ridge. This ridge catches on the "O" ring and forces it out of its place so that when the spout diverts to the shower it leaks out the back.
To get around this problem take sand cloth and sand the burr down to a bevel. Then before you install the spout moisten the end of the copper so it slips on easier Make sure the "O" rimg hasn't rolled out of position before you attempt to install. Good luck Tom

You may have just broken Schedule 80 PVC nipple at the thread. First, you have to tell us what kind of set up you have. If unsure, take a photo of it and post it. Back to you... Milo