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remove all the sections where it says feed pump and just leave the union and connect a line to your feed pump to the union.
also above the T run a pipe to the top of the skimmer cup, then you adjust the water level in the skimmer with the ball valve. from the T add PVC back to your sump, that is the drain.
actually a gate valve would be a better option to get better precesion on tuning the skimmer in
It is recirculating...so it can be internal or external, the pump appears to be a Sedra and it also looks like it was plumbed to the overflow. The red valve was to tune the waterflow into the skimmer, which means it was split off the return. It was set up correctly and should work just fine.
Do you agree with shifty as to everything he drew in or other suggestions?