Probably the diverter valve is bad or clogged with something (such a dime or hairpin) preventing it from fully seating into recirculation mode.

You're not doing the diagnostic correctly. Press Spin Up as many times as needed (should be 3 times) to get BOTH the Hold and Slow lights on. Press Spin Down to back up if you overshoot the mark. There are sixteen diagnostic modes. The number of times pressing the spin speed buttons isn't the key ... it's which spin speed lights are on. Pressing the buttons scrolls up and down through the levels to get into the correct mode. The fault code won't display if you're in the wrong diagnostic mode.

The Perm Press cycle should work without error if the diverter not shifting into recirculate mode is the problem. Perm Press doesn't involve the recirculation function.