A treated deck was installed in 2004, no paint or stain at this time. In 2006 I painted the top rail with an exterior wood paint. The painted surface is now chipping and flaking off. I'm assuming that I should have primed it first (ouch). My question is, do I now have to sand this down to a bare surface and start over again or can I sand the loose paint off and then prime & paint. Thanks

Hi midi! I am assuming you are talking about pressure treated wood. It is always wise to wait at least 6 months for it to dry out enough to paint. I see you definitely did that but, ouch is right! You always need to use a primer, especially for exterior surfaces, before you paint. You need to sand it down as best as you can down to the wood or else you will continue to have problems. If there is some paint left, that is okay, don't drive yourself crazy trying for perfection. Just do the best you can. Once you do that, use an oil based primer. If you have chosen a darker color, get one that has a grey tint to it.

Good luck! :)

Ruby is right! Moisture does funny things and is trapped by enamels or impervious paint coverings that want to blister and peel in short order.
Generally a treated lumber decking can mean pressure treated or fungus treated such as Sunwood that carries a 20 year warranty. Unfortunately the Sunwood type will decay within a few short years unless a vigilant clear seal coating every three to four years is applied. Do not paint decking with enamels that will trap moisture inside the decking that will dry rot in in half the time. The center of the lumber is not saturated in sun dry treating and pressure treated only saturates 40% toward the center of the wood. In posts that are used for fencing posts, Sunwood will last 6-8 years if that. Creosote was one of the old standard ways for wood preservation but it was discontinued because of its poisonous environmental side effects.
Should a new decking be in order and cedar or redwood is available (and affordable) these two woods are probably one of the best untreated ways to go. I visit residences with decking framed back in the 1970's that are still intact. Those are mostly redwood with cedar a close second. None have ever been painted, but they have been tint stained or pressure washed in shaded mossy areas.

Nightmare, I know I did a deck of 2000 sq ft with THE WRONG TYPE OF PAINT. I learned the hardway that there is a special stain and paint for treated lumber. Tell your paint expert that you are painting treated lumber and you will be safe. Research is the operative word here.