Great old expression ... we always took it to mean that someone was a little light in the smarts department ... when said by a spook or clan-com spec, it is a short form of "Why doncha go pound sand up your a$$."
More respectable explanation is:
The origin of the expression "go pound sand" is from a longer expression, not to know (have enough sense to) pound sand down a rathole.
Filling rat holes with sand is menial work, and telling someone to pound sand down a hole is like telling them to go fly a kite.
The expression dates to at least 1912 and is common in the midwestern United States.
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