Andy Prude came over and pulled up the pump head, we didn't find a hole in the pipe, but we did find the check valve on the pump wasn't working right, that explains why the water was running back down the well. Andy put on a separate check valve, and replaced the pump, we suggested that we didn't need to have the pump so deep in the well, we went from some 400 feet to 200 feet deep, we are going to try it at that level and make sure it works OK, so far so good, our neighbor may still decide to replace the pump, it turns out that the pump is too big (horsepower) for that size well, it's too strong and believe it or not, that is not a good thing. It causes the pump to prematurely wear out, go figure... anyhoo, he may change it out soon, but for now, it is working.
It was so interesting watching Andy do his thing, he was great and we learned a lot from watching, helping and asking questions. We got to help a little, our neighbor said we cut at least 2 hours off the time it would have taken (as compared to the last time he had Andy out to replace his pump).
I'll post updates as they occur, but so far, so good! :)