I wrote about the problems I have had with my Shimano Nexus 3-speed hub here. I had someone else look at it and he assured me that the problem was not with the shifter but was just an adjustment problem, as the shifter is able to shift the yellow marker that is visible in the window of the adjustment mechanism, so I had a go at adjusting it myself. I made sure the markers on the adjustment window were lined up as described when the hub is in second gear …
The yellow mark inside the window is supposed to be lined up with the two yellow lines on the glass, this is done by loosening the nut to the right of the mechanism, then adjusting the position of the  yellow mark by using the adjustment knob to the right of the nut, then tightening the nut again. I did this several times but still had no luck with getting first gear. I noticed that the shifter has some play in it when it is in first gear position and that this play is not there when it is in second or third gears. The bike shop has informed me that the new shifter is in stock now so I will be getting it replaced next week and hopefully I will have all 3 gears then.