STEG it is!
Yes, the basin typically would be below the basement floor with a lid flush with the floor. Picture it as a basin like a sump pump would have (2' diameter, 3' deep or so). It probably holds around 30 gallons like I said before.
The pipe out to your septic tank (assuming 40' of 2") holds around 7 gallons of water. When the pump runs it probably is set to pump 20 gallons out of the basin and shut off. When the check valve fails, that 7 gallons of water flows back into the basin, so in reality, you only moved 13 gallons out to your tank. If it is 2", the check valve being bad wouldn't cause your pump to run nonstop like that.
However if it is a 3" or 4" pipe, a lot more water will flow back. On the order of 16 gallons for 3" and 28 gallons for 4". That would indeed cause it to cycle because so much of the water it pumps out comes right back.
If you can find where the pump is... use some water until the pump comes on, then stop ALL water usage in the house. When the pump shuts off, if you hear water flowing back into the basin, you can be pretty sure it is the check valve. That is probably what your friend did.
Shouldn't be an expensive repair if you have someone come out to do it... and if you are handy, you could probably do it yourself.
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I would assume so, the town refers to it as a "gravity system". We also have what is referred to as a "sewage lift station" here in town, as well.
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Many pipes from houses will flow to a common low spot in the system... however, at some point it will need to go uphill again to combine with the other low spots. The lift station is just a pump deep in a manhole somewhere that can pump large flows of water to a higher elevation where gravity usually takes over again.