My husband has been out of work for a little bit so we can't call a repair company currently, but I'm flying in the dark about what is going on. He's an electrician, not familiar with plumbing issues.
At first it seemed like a bad contactor. Well was very loud then stopped working. He cleaned it with electrical cleaner and that seemed to fix it.
Then it was running all the time. The pressure stayed at around 70 psi. He tried to fix an external water leak and it seemed to work. About a week later it started pulling so much sand and air we had sputtering faucets. We turned off the hot water heater and used the water minimally. Now this morning it stopped working all together. Tank says 40psi. And now the hot water heater is draining back into the well system.
I am so confused and have no idea what's going on. I've read a lot of articles online and nothing fits all the symptoms. Please feel free to ask any details, I'd be happy to go check on anything.

 

Let's start with a few questions: Is your well pump submerged in the well, or is the type mounted above ground with pipes running down into the well?

Do you know how deep the well is?

When you say it stopped working all together this morning, do you mean the pump won't run at all? Or just that you have no water even though the gauge says 40 psi?

 

The well pump is submerged. I'm not sure how deep it is but based on the area I'm in I'd guess no more than 40 ft.
The pump won't run and there is no water even though the guage says 40 psi. Since it's not working we turned the power off to it and it still says 40 psi.

 

Keep the water heater heat shut down. When the water is siphoned out of the water heater (via gravity or otherwise) the heater will self destruct if the burner or elements come on and the tank is not full of water.

Since DH is an electrician he can start with the pressure switches to see whether they are turning the pump on and off as needed. Using a multimeter he can figure out whether the pump is not running because it not getting power.

The gauge and the pressure switch connections to the water system seem simple enough to take apart and check for clogging that lots of plumber's know how is not needed.

With the pump off and water falling back down into the well taking more water from the water heater down with it, the gauge is not going to stay at 40 PSI for long unless it or a pipe near it is clogged.

But if you do have trouble checking the gauge for clogging, you can buy a portable gauge that screws onto the hose bibb outside or onto a laundry faucet.

You will need to check the pressure tank for a free (unclogged) connection to the plumbing system and also recharge it.

A pump running constantly and making a lot of noise is not healthy.

 

It's likely the gauge isn't working properly and you really have zero pressure, which is why you have no water.

Allan's suggestion to verify the pump is getting power is a good start. If it is getting power and isn't running....well, that's not good. So let's hope it's not getting power. Some pressure switches have a safety feature that shuts off the pump if the pressure falls to zero. That protects the pump if the well runs dry. That kind of pressure switch has a manual bypass switch on the side that must be activated to allow the pump to run again. If you can post a picture of your well equipment, and the pressure switch it would help.

If the pump is not getting power because the pressure switch isn't closing its contacts, perhaps your husband can carefully manually close the pressure switch and see if the pump runs.

You may find that the pump will run again after being off for a few hours; this would likely mean the thermal protector on the pump tripped and reset after cooling down. One cause for this is the pump running dry.

When the pump runs and you don't get water, it either means the water level in the well has fallen below the pump, there's a bad leak in the pipe between the pump and the pressure tank, or the pump has failed.

If your well is only around 40 feet deep you may be able to drop a weight on a string to find out how deep the water is and how deep the pump is; both would be very useful to know.

 

Lots of sand may mean a major problem. The 3 inch or so pipe lining the well could have rusted out somewhere letting the dirt, soil, earth, etc. along the sides of the well fall down and in a worst case, bury the pump.

This and/or sand has accumulated here and there in the plumbing.