I think he has two separate but somehow related issues. The steering and hydraulics are two totally separate systems. The only point in common is the hydraulic pump. The front section of the pump is hydraulics, the rear section is steering. The front pump is allowing fluid to transfer to the rear section (and under considerable pressure at that) where it has nowhere else to go so it's building pressure in the steering tank. This is the weakest link in the chain so it's being damaged by the pressurized fluid looking for a way out.
Now for why this is happening, that's another matter. I believe, once again, that pressurized fluid has nowhere else to go. When raising the loader the oil from the rod of the cylinders SHOULD be returning to the lift housing reservoir, but evidently it's not. It could be as simple as a bad coupler on that particular circuit. Can the loader exert enough down pressure to lift the front of the tractor? The answer to that might tell us something. How doe the bucket curl/dump feature work? That might also help narrow it down.