Aye dios mio! That is waaaaay too much water. It should have been more like 3 minutes 3x per day for two weeks. 3 minutes might not be enough depending on your sprinkler but some of them can put out a full inch every 20 minutes. All you needed to do was keep the surface sod moist and get the underlying soil just damp. Sounds like you drenched it 3x per day. The only way to tell how well your sprinkler works is with several cat food or tuna cans in the yard. Time how long it takes to fill the cans. That is your time objective to start. Now the question is how do you back off slowly? Start by going to 10 minutes 2x per day and watch it carefully. If it looks okay after a couple days, try skipping a day at that schedule. If that works go to 20 minutes once every other day. This is assuming it takes longer than 20 minutes to fill your cat food cans. I'm thinking it will take an hour. If yours takes much less or much more, please write back. The idea is to get to the point where you are watering about an inch all at one time every 7 days. That applies to the heat of summer. When it cools off you should back off on the frequency but keep the timing about the same. Of course if Mother Nature helps out, all you have to do is supplement to get the full inch. My situation is much different in South Texas, but July is nearly over and I still am not on a weekly watering schedule. We got 3 inches of rain 2 weeks ago and my grass looks great. Temps are in the high 90s to low 100s every day and down to low 70s at night. If your sod is all fescue, you will need to overseed in late August. If it has any Kentucky bluegrass, the KBG will spread back to fill in any thin spots caused by the disease.

The spring seeding failed because spring seedings usually fail. They just don't give the grass a chance to establish before the heat of summer. If you want to mix the new soil with the existing soil, core aeration will probably accomplish it better than the slit seeder approach. If I were doing this I would core aerate, seed, then spread the new soil. Gypsum only helps some clays. It does nothing for the clay I have. Get the soil test and find out if gypsum will help you.

Where do you live? What kind of grass do you have? Is that a concrete sidewalk or curb just peeking into the picture? and if so, does the damage appear to be entirely near the concrete? If you take another picture, take it on a cloudy day or in the shade and get about 3 inches away from the grass. Take a picture of the grass that is still green at the border where the brown grass is.

What kind of mower do you have and what height is #7 on your mower? When was the last time you fertilized and what did you use? I think right now you may be mowing too high/not often enough and may need to water more often too. I doubt you have thatch since it is a new lawn and this is the first year for it. Can you get any close up pics? If you want to check for grubs, get a pitcher or bucket of water with at least 1 gal/ 4 liters of water and add some dish soap to it and make it nice and soapy. Pour that in an area you think you have grubs and you should see them come up to the surface in about a minute or so. Another indication is if you have a lot of birds on your lawn eating.