Just wanted to update anyone who might be interested...
I should have posted because duraleigh's instincts were right. AFTER I disassembled the laterals, I actually checked the sediment in the pool and it was not sand. I went ahead and replaced the lateral assembly because when I removed the old one, one arm literally was just sitting there and fell off when lifted it out. Once the laterals were replaced and new sand was put in, I turned on the filter and everything seemed ok.
I let it run for awhile since it had been days. I came back to check on it a few hours later and the pool was all cloudy and there were air bubbles coming out of the returns. The skimmer was sucking for air and my water level was barely up to the skimmer. I went to the filter and checked the backwash hose and there wasn't really water flowing out, but the ground around it was soaking wet. Then I noticed that it was intermittently squirting some water.
Turned everything off, and disassembled the valve. I have included before and after photos of the gasket sealant and contact cement it was filled with. There was also sand stuck to it. This was the work of the pool company that "took care" of the pool the first year we lived here - before I found you awesome people here at TFP.
After cleaning and order parts to rebuild the valve - O-ring, spring, etc. I used some lube on everything and now the valve opens and turns sooo easily. Been running filter for a few hours now and so far no problems.
Just want to thank everyone, especially duraleigh who got me on the right track with this. Hit me up if you have any questions about the valve rebuild.