The pressure should be coming into the canister at the midpoint of the side, and exiting out the bottom. There's a small (1/16") hole partway up the standpipe that controls oil flow back to the oil pan. If that hole is plugged up, there's no telling how the oil would try to flow through the filter element.
I'd suggest removing the filter, and do a thorough cleanup of the canister, then inspect the standpipe with a bright LED flashlight and an inspection mirror. You might also apply a good shot of air pressure to the drain fitting at the bottom of the canister to be sure the outlet orfice is clear. Once the canister is reinstalled, leave the return line loose at the block (into a catch can) and see if the oil drains from the filter properly with the engine running. It should take a minute or two to run a quart through the filter, so there won't be any engine damage if it doesn't go back into the engine immediately.
Final check- - - -lots of air pressure to the drainback fitting near the oil pan rail to be sure there's a free path back to the pan. Good luck!
Jerry
