I saw this on vhs back in the early 1990s. I only vaguely remember it, but I remember that like you I felt that the story didn't really work. Thanks for the detailed review, but your rating of 2/5 makes me think I should think twice before revisiting.
From the review:
"White Sands is a rather absurd thriller, with so many implausible red herrings and coincidences to be very entertaining or even, dare I say, thrilling. That is a bit of a surprise, considering it was directed by Roger Donaldson (No Way Out) and written by Daniel Pyne (Doc Hollywood and several episodes of Miami Vice). The performances are superb, not only the leads Willem Dafoe, Mickey Rourke, and Mary Elizabeth Mastrantonio, but also supporting players Samuel L. Jackson (who looks similar to the way he does in Captain Marvel), M. Emmet Walsh as the possibly crooked coroner, and James Rebhorn as an FBI Internal Affairs agent."