[Flipman]

Switch with red light is for electric heater in your hot water tank, it is a dual heat with gas and electric...don't turn it on unless tank has water in it! Also, on outside access door to water heater there is a switch with a cotter key in it, that is the safety switch for electric heater, must be turned on for heat.
The strap holding the fresh water tank is probably broken, and the tank is laying on top of the basement flooring, which is why it's bulging...you will need to fix that.