Slim, welcome to The Forum! You've got a System 2 modular DE filter. The 2 most likely places where DE could bypass the cartridge are the air relief assembly (the blue plastic do-hickie that sticks out of the top) and the pipe that the cart slides onto. I can't remember if there is an o-ring and my parts book doesn't show one but, a bad o-ring on the standpipe that the cart slides onto would be my first place to check.

BTW, can you post some test #s? If we had those, we could help you rid yourself of the algae.