If anyone was wondering what happened with this, I think I have it all figured out now.
After putting new o-rings on the spool it still only could build 15 psi in the basement. Since I am not living in the house right now, I was just turning it on long enough to flush the toilet when working there. Water started coming up out of the ground half way between the well and house when pump was running.
Once the ground thawed, I dug down to where the pipe and found the hole in the steel pipe.
I think I figured out what was going on here now. There must have been an old house here before the current one was built in 1982. That house must have had a galvanized pressure tank with drainback system. There was old wiring along the pipe in a corrugated steel conduit. (This does not come into the house anywhere that I can find). There was also another power wire that looks like what I would expect from the 80's and then a newer wire both buried about a foot down.
I am guessing when they removed the old house, they just spliced on to the existing pipe and ran that up through the basement floor. That would explain why it is steel. The well driller in the area said that no one would have used steel pipe after the early 70's in this area because of the PH of the water.
When they connected it to the new house, they put in a bladder pressure tank and left the drainback valve on the spool. Also, the pipe was only buried down about 4' since it was a drainback system. I am guessing it survived as long as it did because the running water was keeping the frost from going as low. For the last few years the house was only used intermittently and it probably froze.
Once it is dry enough to dig a trench, I am going to cut in a new pitless adapter down lower in the casing and cap the original pipe connection on the Baker unit. and run new poly pipe into the house. That will eliminate the rest of this cobbled system and hopefully not have any more issues with it.