DE is Diotomaceous Earth (even if I spelled it wrong). It's a very fine filtering medium, usually used in pools with DE filters. But lately we have found that 1 cup added to a sand filter can help it filter much finer particles.

Sand filters sometimes cannot get the finest stuff--but the DE seems to help that. It sounds like you have a lot of dead algae and either the system isn't sucking it in from parts of the pool or your sand filter isn't filtering it. Are you sure you are using filter sand? Are you sure your filter is running correctly? All should be checked..