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I would not use this product unless you exactly know what it is, and if it's appropriate for your coffee machine. Instead get some Saeco decalcifier powder DEZCAL that you add to your water and follow your machine instruction on how to decalcify.
As far as I remember, It should switch paranello stick on the right of the machine (milk steamer) from steam to hot water (for making tea for example) and back. Try pressing and turn the knob at the right side of the machine.
Water container have a small valve which work with a small spring and o ring. You can remove the container over a sink unit fill with water and try to press with your finger to check if it block the water without pressing it and also check visual if their any dirt or scale blocking it from closing full or if the o ring is damages in any point.
In any case the valve work very simple the the spring force down the piston and o ring should block the water from ascape if any of thsi is dirty or damage or the loose then the water will leak.
You should also check the valve base on the machine body since their can be something that blocking the valve sit corectly on base so water can leak out of the piping arount the machine.
It would be cheaper to check the thermostat and heating element first and the wiring continuity, although I am not sure if you can find the replacement parts. If you can't, then it looks like you have no choice but to replace the entire assembly.