Not being familiar with you system it's hard to know exactly what you're dealing with. But maybe there's some useful information here: Your pump will not move water if it's pulling air in on the suction (tank) side. It sounds like your hand pump has developed a leak somewhere allowing it to pull air in. (When I read your post my first thought was that maybe the hand pump is supposed to be isolated when you operate the electric pump.) If it was mine (and I wasn't interested in repairing the leak), I would look at splitting the line somewhere between the tank and the suction line of both pumps. Adding a a simple valve would allow you to isolate either side. It's not difficult or expensive to accomplish.
On the other hand, if you don't use the hand pump removing it and plugging the pipe is a good idea. I think it would be nice to have both available and would look to repair the leak that's allowing air into your system. It might be an inexpensive seal - something like garden hose gasket. Good Luck, and hopefully someone in the forum that has been down that road will give you a better answer.