Jc, welcome aboard, you've made a great choice caring for your pool yourself (rather than having your pocket picked by some pool dudes who may or may not know what they're diong) and comming here to learn how to do it
I find it very ! hard to believe that a clot of DE could burn out your pump, did they also throw it into a barrel of water and convince you that it wasn't a witch when it sank? Something else was going on that they didn't realize.
However, you're not backwashing properly and neither are the folks who told you how to do it. I've posted this info a number of times here, here's what I could find easily:
http://www.poolforum.com/pf2/showthread.php?p=13564
http://www.poolforum.com/pf2/showthread.php?t=2562
http://www.poolforum.com/pf2/showthread.php?p=15802
There are 2 points here, insert the rinse cycle after every backwash and only add 80% of the recomended DE when recharging the filter! In your case the amount of De to add is just under 5 lbs.
I work on hundreds of these units per year (however that's just a fraction of the number of pool owners that Leslies misinforms a week ).
Good luck with the pool and have a great 4th! - Waste