Yes, the leveling valve does serve to block the return of oil from struts/accumulators to the reservoir when it is in the neutral position. Also, when in the neutral position it routes pumped oil back to the reservoir.

First step is to ensure that the valve operating lever is in the neutral position when the car is at normal ride height. The adjusting link is to be disconnected from the operating lever, and the lever pinned to the body of the valve (hole in lever, and bore in valve) in the neutral position. The length of the adjusting link is then set to provide attachment free of tension. In the event that adjustment does not solve the issue, the valve is rebuildable.