We ended up doing just this. It does seem like the material, once dried a little, is good clay as it picks really well. When it is wet however compressing the ball in your hand makes it just squish out your fingers. We dug the area out and packed back with dryer good dirt under the top soil of a side hill around the pond. It is solid now. We pulled up the saturated wet material and are letting it dry before be scatter it back across the pond floor and compact for another layer. We have successfully got a hard compacted on in the bottom now so we figured even if it is not the right material it will be on top of our already compacted pan. I have been talking with TJ and do plan on getting some polymer but we are kind of racing the weather holding out here in Nebraska. We want to get this as far as we can before we start getting snow that will hopefully start filling the pond back up.

Thank you for the responses. This forum and TJs help has been extremely beneficial. I plan on writing up a full story on what we did at the end of this project as it may be helpful for others with similar situation.