That is the filter (looks like a Hayward DE filter) and you need to backwash and recharge it with DE when the pressure rises 20-25% over the clean pressure. If this setup is new to you, I would suggest backwashing and then following the DE Filter Cleaning Tutorial to inspect it and make sure it is in good shape.
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Oh, I thought you had already done it.
Assuming the pump is above the water level, you just turn off the pump and open up the lid, clean the basket out and put it back in, lube the lid o-ring, put the lid back on, and turn on the pump. It should refill with water and prime in less than a few minutes. If not, turn the pump off and time to troubleshoot.
Actually then you should also open the air valve by the gauge on the filter to let the air out of the system and then close it when water shoots out.
When you say waste basket, do you mean the skimmer basket by the pool or the pump basket?
silicone or teflon lubricant for o-rings/gaskets
I just purchased a 2 pack of magic lube II(silicon) from amazon it was just under $20 Received it in two days!One more questions since where on this topic. I noticed the waste basket has a broken area on the top (the lip area about 2 inches). The waste basket also has a second lip (for added security) a few inches from the top one which is fine. I measured the basket top circle to be 6" and the height of the basket almost 7.5" inches. In terms of getting a new waste basket, anything close to the measurement should be fine?
Also, when you mentioned lube the lid o-ring, what do you use to lube it?