I had the same issue, the pressure portafilter needs to be replaced. I recommend the saeco barista non pressurized portafilter. I have had it 5 years so far and never an issue. I bought mine on E-bay and saved about $10.00
First, if water comes out of the wand while you are brewing coffee then the valve has a problem, it might need to be replaced or the pressure buildup is forcing water through. Remove the shower screen and screw in the head and clean, then descale the machine using Scalekleen, vinegar is no the best thing for descaling the machine.
If anyone is looking for the Kenmore Coffee Water Filter model 69768 - Sears / Kmart re-branded the filter under the Cuisinart name making them near impossible to find under the Kenmore name. HERE is the link to order them under the Cuisinart name at SEARS (its the EXACT same filter and they come 2 to a pack)
http://www.sears.com/shc/s/p_10153_12605_00869768000P
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The ultimate fix for this was to replace the cup that holds the coffee. No amount of descaling provided the fix, including the recommended descaling product above. The cup was about $25, and the machine has been working every since I replaced it, about 2 years.
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