Liner problem??

What type of liner is that (overlap, jhook or vbead)?? Also have you inspected the cove below the waterline when the liner has dropped to make sure you don't have settling or other issues?
 
That looks a lot like the liner I had before my current one. It's a Blue Sapphire with a J-hook at the top of the liner. I would take the top seat off of a section or three and see what's going on. My pool has the liner, a resin track to hold the liner in place and then the top seat. I think on an overlap liner you add a coping strip. I would see if you can take off the top seat, pull the liner back over the wall and re-install everything. It should be OK to remove the top rail and other items from a couple sections without damaging the pool.
 
Have you had a chance to pull off the top seats and corner caps around the deck? I am going to guess it's a pretty simple fix.

It seems if the kids stood on the top seat to jump in that it could have pinched the bead and pulled it over the top of the wall.
 
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