Yes, it is a sand filter. The sand was just replace about 6 weeks ago thinking that would alleviate the problem.

As far as the handle, in the past we didn't turn the pump off before turning it - didn't know too (yes, although it says to right on the thing). We do turn the pump off now.

So, I called the pool store where we bought the assembly and the lady was so nice (not the place that kept telling me I had algae and to shock). She said that it sounded like the hoses were hooked up incorrectly. And, she was right - we had the hose from the pump connected to the place where the water is supposed to go back into the pool. The hoses were reversed. This was the problem all along. Hubby switched them this evening and when he did, some crud blew back into the pool. He checked all positions on the valve and there is absolutely no water going into the pool on waste and backwash. We'll vacuum to waste tomorrow!

Okay, pool idiot of the year goes to......me. I feel so stupid.