Nyle Geyser RE problem

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My nipple doesn't seem to go into the tank as far the picture in the manual. After unscrewing the drain off the hot water heater, the treads are pretty close to the outside of the tank, therefore most of the nipple is outside of the edge of the tank. I guess worst case I would just be taking a slightly lower water temperature with more of the nipple exposed like that (though I did wrap everything up in cork and foam tank per the instructions.)

It seems to be working so far after 24 hours.
 
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