Hi guys,
Like I have mentioned before, take the pan off the heat before adding your spice blend and chilli powder. My rule of thumb is 1 tsp of chilli powder for Madras, 2 for vindaloo and three for a Phall. Even when I've done a Phall using 2 tsp of my spice blend and 3 tsp of Chilli powder, thats 5 tsp's of powder in all, I never get this gritty/sandiness with my final dish.
If you take the pan off the heat, you should remove the risk of burning your spices. Usually, chilli powder and paprika has a slighlty more corse texture than other ground spices. If you burn these whilst frying, the grains, for the want of a better term, they will go hard and therefor making it impossible to lose the grainyness.
I think a lot of the problem could be overspicing. Two desertspoons of spice blend seems excessive to me. I use 2 tsp's at the very most, and whatever extra chilli/paprika that I need!
Hope this helps,
Ray