edfromtampa, as far as I have learned, the tank is installed in an irrigation system to avoid the very two problems which you describe. Damage can occur to either the pump or the pressure relief valve if the system is allowed to operate as is.

The valve you are talking about is a pressure relief valve (PRV). It is a safety device to prevent WH explosions. Either the valve is bad and needs to be replaced with EXACTLY the same spec valve despite what a vest wearing know it all at a box store says... "this one fits everything". Or you have a closed plumbing system and you have a thermal expansion problem that needs to be corrected NOW. If you have a closed plumbing system, and that has been code since the 90's, there should be a small thermal expansion tank installed proximate to the WH. These tanks have a bladder that may have failed and the tank must be replaced. OR... you have a closed plumbing system and there is no thermal expansion device installed, which is not uncommon, and there needs to be one installed. In this case the PRV is acting as a thermal expansion device and it is NOT intended to. Here's some light reading on thermal expansion... http://www.watts.com/pages/learnabout/thermalExpansion.asp If this seems beyond your skill level call a plumber... and do it SOON.

Regardless of the logic that a tankless T&P may not need to be gravity drained the prevailing policy of the local plumbing inspectors is what matters and will get you a red or green tag. If the tankless doesn't need to be gravity drained it may take many years to filter into the codes. I think I read somewhere that Watts, the manufacturer of the majority of T&P valves, that in order for the T&P valve to meet spec has to be gravity drained and they don't mention tank or tankless as a distinction. Look at the last paragraph on page 2 of the following link... http://media.wattswater.com/ES-10L-100XL.pdf You can call the inspectors and ask, but I'd want something in writing that the current install is OK. Was this tankless install permitted and inspected? Since this concern is documented in the home inspection and you are bound by disclosure to offer that info you are right to want to get the answer and do what is necessary. Let us know what you find out.

Boiler not furnace, yep check expansion tank and probably temperature sensor (aquastat I believe) cant rule out a bad valve even though its new, that or some gunk got in it making it stuck open (which is common)