Your problem with the pressure is caused by a lack of air in your expansion vessel.The vessel is behind the boiler (nomally red).You need to remove the dust cap(same as car tyre)from the to of it and pump it up to 0.5 bar but you will need to remove any water pressure from the boiler.
The radiators heating when running water does sound like a faulty diverter.An origional ariston would probly cost around £120.00 and it's a bit of a sod to change,so price sounds about right.
Hope this helps
Pete 100% Heating ,Bristol 01454854067, November 2006