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The winner: hazmic! Yes, it was the outlet check valve--more cheap crap installed by Montana! Got a metal, not plastic, check valve for just a few cents more, so shouldn't have that problem again. It was all corroded and partially failed. High water pressure can cause it to fail, so use your reducer. Guess it had been going out for months as we had a vibrating pipe like noise coming from the tank. According to Suburban, Montana installs whatever piping they want and as set out above, it is used to prevent the anti-freeze from getting into the tank.
Guess, if you don't winterize, you don't need a check valve. Thanks to everyone for their help and interest. By the way, had to use a hammer to break the fitting loose from the hot water tank.
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