2003 southwind by pass valve.

Othertonka is right my 2003 Pace Arrow has the same setup. Just be sure to put the valve in city/use after filling. The water pump gets its supply in that position. If you leave it in fill you won't get water.

I think what you are referring to is the bypass valve that allows the city water, when you are hooked up to city water, to bypass and then it fills up your fresh water tank. Mine is a 2004 southwind and have the same valve. A word of caution when you use this valve, since you will be filling the tank, it helps to remove the gravity tank fill cap to allow air to escape and to know when the tank is full as the water will be gushing out of the fill opening.
So hook up the water hose to the city water opening, go around to the other side and remove the gravity fill cap, turn the water on and then open the bypass valve and you should hear the water going into the tank. If so you found out what the valve does.