The hydrostatic valve allows groundwater to fill your pool if the ground is saturated with water and the water level in your pool gets too low. It's basically a protective element. But if the ground is not saturated and the valve has a leak, then water leaks out of the pool into the ground. It would be similar to a leak in the main drain plumbing line. So if they installed a new hydrostatic valve and did a sloppy job, then it could leak. If the water level keeps going down past the light, then the only sources for a leak would be a tear in the liner OR a leak in the main drain/hydrostat.
Yes, most light junction boxes are within 5 ft of the pool, that's how they are designed. When a light is installed, they usually coil up some wire in the light niche so that you can pull the light fixture out and put it up on the deck. Most light niches are designed to accept a light fixture with a wire coiled around it. So whoever installed that light and cut the cord to the length of the niche to junction box conduit and didn't leave extra cord did the job incorrectly. Was this light ever replaced?
They're making it sound like some kind of difficult situation but it's not. If the cord is indeed that short, then you disconnect it at the above ground location and tie a extra length of pull cord rope to the end of the wire. That way, when you pull the light out of the niche, you can pull the wiring back by the cord. Even if they didn't do that, any electrician has flexible fiberglass "fish" tape that they can run down the conduit to create a pull wire with ... it's pretty standard stuff. Heck, if they are working on pools, they should have the fish tape to do the wire pull with.
These guys are either incompetent or pretending to be so that they can seem blameless and perplexed. If I were you, I would be out there when they are doing the work watching them. They clearly need to be supervised ... or, at the very least, now that your pool has drained off so much water and this is the second trip out, I would be on the phone with the owner of the pool company demanding that he show up and keep his crew in line.