Found this old thread which helped me greatly with a very similar issue to the OP. With all your help, I was able to successfully remove a sheared drain valve from my tank. Here is what I did.
1) Bought the Irwin square screw extractor from Amazon, just as advised above.
2) Used a blow torch and put heat on the brass fitting, probably 2-3 minutes. I tried less time at first, but didnt see any real results. 2-3 minutes seemed to get it just soft enough. Standard $17 blow torch from Lowes.
3) Took the largest ST-6 extractor, my valve is 1/2", and gave it a couple strong taps with a rubber mallet. Then I gave it a couple minutes to cool a bit (not sure that was needed). At that point I grabbed a crescent wrench, since I dont have anything I could attach directly to the extractor of that size, and started to slowly twist. Boom, got my old valve out cleanly.
Thank you again for all the great insight on this thread. I hope others are helped in the future.
