DE in the water will not really have any impact on water chemistry but might have a slight drying effect on the skin since it is a dessicant. Good news is that it WILL filter out given time. How much DE did you put in your sand filter? We normally recommend starting with half a cup in a slurry: waiting about an hour or so to check the pressure and if you don't have a 1 psi rise in pressure add another half a cup slurry until you do. Most sand filters need between 1/2 cup to 2 cups of DE to get a 1 psi filter increase and the increase does not occur immediately. It usually takes a few hours as the filter "gets dirty" ( a dirty filter will filter better than a clean filter ) and the pressure to increase. Adding the DE just starts this process faster than it normally would by filling in between the sand grains and filtering out smaller particles. As you have found, if you dont wait long enough or add too much DE (2 psi from DE alone is too much DE) the filter pressure will rise very quickly and you will have to start all over again after backwashing with less DE.