Ok,silly question;does the 2spd shift when pedaling? Derailleurs don't work when stationary. Also,a wet/dirty chain should have no effect on shifting unless it's really gunked up with mud or snow/ice. It's quite possible that stone was the issue.

As for the hub shifter cable,you are adjusting it when it's in third,right? Might want to but a drop of blue Loctite on the threads.