I'm no expert with your tractor. Running it a short time - minute or 3 - won't hurt things, but you don't want to use it this way, as it is over-pressuring and creating heat & extra work for the hyd pump, over time that heat will damage something. With a short run, rest assured you didn't hurt anything.
This topic comes up on this site a lot. There are 2 things that could be going on:
1. To run the hydraulic backhoe, they are tapping into a hyd line that also runs something else (The hyd remotes? The 3pt hitch?) You get to use one or the other, but not both at the same time. The oil free-flows through your backhoe when it is not actually 'working' and all is fine. Now with the hoe removed, the oil can't flow through, so you need to change the plumbing around so the 'other thing' can get the oil and all will work fine.
2. Or, a backhoe tends to use a lot of oil flow, so they provide a special hose for the oil to return from the hoe quickly back to the tractor sump so it can flow freely and cool down quicker. Again when the hoe is removed, this special '3rd hose' needs to be dealt with so oil flows throught your hydraulics properly.
In either case, there is a special way the oil is set up to flow through the backhoe - without the backhoe the oil is blocked off, and you need to restore the oil flow to 'normal'. Some need 2 hoses connected together; others need a valve moved as you suggest.
I would think the valve would need to be all the way 'off' to use the backhoe, and would need to be all the way 'open' to use without the backhoe, but perhaps it is a etering valve and can also be left somewhere in between to speed up or slow down the 'other' thing that uses the same oil flow.
But - if you don't have a tractor/ hoe manual, wait until you hear from someone familar with your setup.
--->Paul