One one of my 261's the dowel was set in allready, no problem. On the other engine, the dowel was in the out postion.looking closely at the siuation, the bypass was blocked, the oil would only flow through the filter.By the way,this second engine, from a fire truck, was equipped with a factory AC full flow filter.So I'm thinking the "in or out dowel rule" is not an absolute, but you have closely checked yours ,so hopefully the dowel will drive in without a big hassle.
