Water Softener Filter Changed

Hello, My name is Carole I just changed my water softener filter and I had to turn it on off at the top of the cap then I took off the plastic container that housed the filter. I cleaned it out really good. It looked really rusty looking. I put the new filter in then after screwing it back on, I turned it on ON again. There was a bipass that I didn't know what to do with. The problem is, When I put it on ON the water in the house wont come on now. When I put it on OFF it comes in. I think it should be on ON. What is happening to it? What did I do wrong?