Water pressure raises and drops quickly. Pulled tank and tried to drain. Released air pressure. Tank is full of water still. Is diaphram blown?

Why would the tank not drain? Thats issue #1 to address.

You could really help us out if you describe your system better like for starters.

Bladder tank on the well? Typical of a waterlogged tank. If it is full of water, diaphragm could be bad. Try to pressurize with air, 2# below cut on pressure. If you can't pressurize, it is bad and needs replacement.

"Water pressure raises and drops quickly"

Assuming this is happening ONLY when you are using water, then it sure points toward a bad tank.