Any tips on the tankless water heater

Wish i could help. I have an Atwood and seems to be ok so far but generally you will probably have to balance incoming water temp with flow. As far as the 40 psi you have, where are you measuring it. And is it still 40 with the faucet open. I would at least try it with the filter and regulator removed. I think you have see if it is getting cold because the burner goes off or runs out of capacity. If it is capacity, close the valve a little. If the burner cuts off because it is too hot, turn the hot water on on the sink at the same time. If it then stays hot, remove the restriction in the shower head. My guess is it's getting too hot. Also, if it is getting too hot you might be able too turn the gas pressure down a bit. The problem is that the flow requirement changes with the season.
Good lick and let us know if you solve it or throw it out.