There is a good picture of the old Spanish Bay sand plant in the Pebble Beach coffee table book that the PBC put out several years ago.
Judging by the picture, the land certainly does not scream "perfect golf site". The picture is not dated, unfortunately. There are several beautiful dunes on the left hand side of the picture (north up the coast from the sand pit), but my understanding is that this property is not part of the present course. In the picture, there is a road (17 mile drive?) separating the dunes from the sand plant site.
Tiger, I believe that I read somewhere that the sand plant was the only Pebble Beach Company operation that made any money during the Depression, and helped to keep the company afloat. It's interesting to note that the plant did not close until 1973.