John,
If you throw in DE and it comes out the returns, and you know the laterals are OK, then something else has happened or there is a sneak path for fine stuff. All I know is how my Hayward filter is constructed. The center pipe from the laterals mates with a pipe in the variflow valve assembly. (top mount valve). Valve pipe slides over the center pipe. Very loose fit. I suspect they designed it this way to allow air to bleed off the top of the sand chamber. This gap could be a sneak path for the DE. Last Summer I was in there for some reason and found this situation. Wrapped a few layers of plastic electrical tape over the center pipe to close the gap and get a snug fit. Now any trapped air bleeds very slowly but that's OK. Just a thought.
Al