I have always thought of sandy hair as a very light ginger colour, which has more red tones in it than blonde hair. I also associate this colour with light eyelashes and freckled skin.

The Shorter OED says that "sandy", when referring to hair, means "of a yellowish red colour". Maybe the term is used differently elsewhere, but the link with red hair and tendency to freckles would explain why sandy hair is so offensive to Sir Walter.