My tub/shower has 3 stems. Hot, cold, & shower diverter.
I had to replace a washer on the diverter, but when I re-installed it, the water comes out of the tub spigot and a little bit out of the shower. How do I properly reinstall this?

I think my problem is having the diverter in the correct open or closed position before screwing it into the valve

How can I tell if the diverter is open or bottomed out?
Which should it be before installing it?