Mike,
Remember when you were a kid and put your thumb over the end of a straw in a glass of water?? When you pulled the straw out of the glass, the water stayed in the straw...
That is how your pump is supposed to work.. For all the water to drain back into the pool. you have to have an air leak somewhere... Most likely right at the pump lid, but it could be else where... As an example, if the system was holding the water in the pump and you opened the filter air relief valve the water would all drain back into the pool..
As a general rule, an air leak on the pressure side of the pump would also shoot out water when the pump is on.. Does not take much.. Do you have any wet spots when the pump is running??
The first thing I would do is to inspect the pump lid O-Ring to make sure it looks ok and is lubed with pool lube..
Thanks,
Jim R.