Well, I took the whole rig apart last night, removed the valve on the input side of the pump, changed the position of the pump so that the outlet is facing up, and added a "prime valve" off a T, post pump.
It definately seems to work better, I have to let gravity fill the pump and then turn it on. However I am still losing pressure after a time. I suspect that the inside diameter of the kettle valve is too small and the pump is drawing air from the HLT input. I plan to put a vavle there, but eventually get larger kettle. I would like to get to 10 gallon batches eventually anyway...