Now that I see which valve it is I'm not 100% sure it's the diaphragm. That's a 2711APR designed to be above ground but I find them in a box all the time. The valve will still come on normally.
The knob you're turning is the bleeder screw. It's supposed to leak when you turn it on.
That valve is very easy to work on. They don't come simpler. I would turn the water off. Take the top of the valve off. Take the solenoid off. Look for a grain of sand or something blocking a port. Check the diaphragm. It might even be the solenoid not opening all the way. A super simple way to fix that valve would be to buy one just like it and swap out all the parts. Even still make sure there's nothing blocking the port where that tiny O-ring goes.
www.sprinklerwarehouse.com/Irritrol-2711APR-3-4-Anti-Siphon-Valve-p/2711apr.htm