well, my needlewheel pump has the inlet for hte air in the discharge on the pump. dont make a whole lot of sense.
try this, take the pump out of the water and look down the discharge. can you see the angle cut on the inlet for hte air? if not, try to rotate it a bit. on mine you can see that the end of it is slicked at an angle. if it is turned where you cannot see this, it will blow water out cause there is no vacuum created by the water.