Ok to answer the first question.... the a/c had to have been engaging from what you discribed because from the inside of the car you can hear it engage. I honestly believe I have no leaks... I have never seen anything drip where I have parked and from doing my oil changes, I have seen no signs of residue coming down as well.

Now..... when toying with the knob part... when i turned it to cool, I already had the valve your talking about and told me to do shut. But when I was messing with the knob, since it wasnt working anyway, I wanted to make sure my heater was atleast working. So I turned the knob to the hot side with the AC off.... went outside and from what I saw, the valve didnt turn itself to open. By turning it by hand tho, thats when I saw the loop go in and out as said earlier.

Thank you so much for helping me understand my AC system. I lack deeply in this area knowledge wise. BTW I used to work at Honda, but only as a lube tech.

I hope what I have said helps you out.