It seems that you do not have a buffer tank, causing you desuperheater not to contribute much. The rest sounds normal, but at 30ft distance, it looses as much as it adds.

I agree with Doc, you should have a desuperheater storage tank. The video I am providing a link for below has almost the exact same system(Watefurnace NDV064 with two marathon MR50245 units, one as a storage and one as a water heater) This is how the system should be hooked up. Fast forward to 2:31 to see the water heaters hooked up and then watch the rest of the video to see before and afters of the system.
http://youtu.be/egt5n_j93L4

I am also thinking that maybe the reason your water temps change is that your geothermal desuperheater should be putting out water close to 130 degrees into your Marathon, so when the geothermal is running your water heater shuts off even though the water on the top(where the hot water outlet is) has not been fully heated yet.

It is normal for the desuper to heat water by only a few degrees

It is also quite possible for a desuper to EXTRACT heat from a tank heated by other means, and that sounds like what is happening to you. That means you may face an astonishingly high electric bill as your water heater is heating your geo system's refrigerant. If the 140 to 120 temperature reduction is a consistent condition, it may signify that the water heater elements are firing almost continually at a rate of 4.5 kw...If true, that is going to be expensive

My reasoning is that the water heater is set for 140, which explains why the temperature is 140 when the desuper is off. When the desuper is on, it may be transferring heat from hot water to refrigerant, reducing water temperature to 120. That would be bad.

I would give serious consideration to shutting off the desuper until a buffer (preheat tank) is installed.

I believe WF recommends 100°F for both elements.

Although not popular amongst the pros here, I like 120-130°F for the upper thermostat and 100°F for the lower thermostat and we use a water heater timer which makes power available to our water heater elements for 3 hours per day just before large hot water demands.  Our elements aren't necessarily "on" for 3 hours per day (the thermostat on the elements determine that), but power is available in case our desuperheaters don't run enough to provide an adequate supply hot water.

This setup may not work well for everyone.

100*F for both elements will result in tepid showers during times when geo HVAC is inactive during mild weather. If my wife had to shower using just 100*F "hot" water, I'd be in deep doo-doo.

Geome's scheme works for families whose hot water draws are predictable as to time of day,

The dials on the heating element thermostats are notoriously unreliable. Pay them no mind. Adjust them in reference to hot water temp delivered to fixtures.

You can diddle around with uppper and lower element thermostat setpoints to your heart's content, but the bottom line is that you need a separate, unpowered upstream desuperheater preheat water tank in order for the desuperheater to be effective.