leak in new pump?

I installed a new pump recently (1hp 2-spd Hayward Super Pump) to replace an old one that failed. I seem to have a leak in the suction plumbing that causes problems on low speed, but have not been able to track it down.

On low speed there is usually a good amount of bubbles issuing from the return line into the pool. If I turn the pump off I can watch an air bubble sneak out of the pump inlet line into the pump trap every 5 sec. or so. If I leave it off overnight the level in the pump basket will drop to below the inlet.

A few questions for those of you who know a lot about air leaks- why dont I notice any bubbles from the return line on high speed? Also, on low speed, the water level never completely fills the pump basket- at startup there is a small air bubble that expands over about 10 minutes until the water level in the pump trap comes only up to the top of the inlet line. Could the leak be causing this or is the pump just not strong enough to fill the pump trap on low speed? It never loses prime but it never fills up either.

I'd suspect the seal on the pump basket lid. Reason I say this is on high speed the suction is a lot more than on low and pulls the lid for a tighter fit and better seal. All it would take is a small piece of dirt. Clean the gasket and use ample silicone lube and see if that helps. Also, on low speed there may not be enough flow to completely purge the air bubble in the basket. I wouldn't worry about that.
Al