What is the source for leaving on the tefillin until after the laining on the third day (1st day chol hamoed) Pesach? Heard that because the laining is about tefillin, we leave them on. Where is the source?

Even those who don tefilin on Chol HaMoed, the proper custom is to remove them before saying Hallel, which is before the Torah reading (see Magen Avraham 25, 31). The custom you mention is cited in Resp. Davar Yatziv Or. Ch. 11 (citing the Chok Ya'akov 490, 2), that there were those who wore tefilin on the 1st day of Chol HaMoed Pesach until after the Torah reading which mentions Tefilin, but even he corrects them, that they should remove their Tefilin before Hallel.