Over time calcification builds up on valves affecting their ability to function properly. Sometimes you can repair it by replacing the cartridge or possibly just cleaning it with a de-calcifying agent. Three or four-way valves seem to be more susceptible to this especially if they've been left in one position too long. It's always a good idea to occasionally rotate them through their different functions to keep them operable.
At this point I would replace the cartridge if there is one and if you can remove it. If you can remove it try to clean the inside of the valve body with a de-calc product and a stiff brush to remove any build-up. Be careful of any o-rings that might be there although they should come out with the cartridge.
If this doesn't work you might have to replace the diverter. Hopefully, you can get access through the other side of the shower wall. You wouldn't want to mess up the attractive tile you have. Good luck.

Take a small slotted screwdriver and insert in under the chrome top of the diverter knob and twist. You'll get more leverage twisting the screwdriver than a butter knife. The chrome top should pop off exposing a screw which you just have to unscrew