Yes I agree that spinning 180 degrees will reverse hot and cold but that is not what the inspector was saying. Hot and cold seems to be correct right now, it is cold at 6 o'clock and hot at 9 o'clock. The inspector said that the off position should be at 6 o'clock, and not at 12 o'clock (where it is now). The inspector said was saying that rotating something would fix that problem. I do not understand what the inside of the cartridge really looks like so I do not understand how it is possible that the off position is in the 12 o'clock position instead of the 6 o'clock position.

So I got a new cartridge, installed it, and it was still the same. I then tried turning it around to reverse hot and cold and realized what my problem was. I didn't need to remove the cartridge at all. I just needed to remove the knob and rotate it 180 deg and would would have been fixed. At this point, I pulled the cartridge out again to put hot and cold back correctly.

However I had some trouble getting it out. I had rotated it 45 deg, but it would only come out half way. I rotated it the other way and it was the same. After a while of rotating back and forth, it did finally come out, but I noticed that one of the big rubber seals on the side was gone. After 10min of searching, I found that the rubber seal somehow went inside of the supply pipe. All that rotating must have knocked it loose and there seems to be a slit in the pipe just large enough for the big rubber seal to go in. I tried just reinstalling the cartridge, but the shower wouldn't turn off, so I installed the old cartridge back in and it seems to be working.

So the original problem is fixed, but now I have a rubber seal stuck in the pipe. It doesn't seem to be blocking the water so I suppose I could leave it in there. Any ideas on how I might pull it out. I don't have any tools thin and narrow enough to pull it out of the slit.

Turn water off. Remove cartridge. Put towel over the faucet. Have somebody to turn water ON for few seconds at the time. Pressure will blow it out of the pipe. If it is Cold water pipe the washer is stuck in - than you can close water supply to the water heater to have more pressure and flow in cold water side. It is helpful to use clean white towel to cover the open body. That's because you will be able to see the black washer as it comes out. Good Luck. Milo

I tried to do that, but it doesn't seem to work. Perhaps I did not describe the shape well enough.

Here is a photo, you can see the black seal, but you can see the hole that it is in.