Turning those valves would have no affect on DE going into the pool. But, I am assuming that you then cleaned the filter to fix the vac and now you see the DE?
Did you just backwash and then recharge with DE? Are you sure the valve was set to filter when you added the DE? Did the DE enter the pool right after you were adding it?
If you did not open up the filter for a full cleaning, (when was the last time this was done as it should be done yearly), then it would not make sense that something suddenly went wrong within the filter. So, I am guessing either the valve was in the wrong place when DE was added or the seal in the backwash valve is leaking.
BTW, we recommend backwashing when the pressure rises 20-25% over the clean pressure. This will ensure that you maintain adequate flow and thus would not have a problem with the vac.