The oiling/filtering system of a 'late' 261 is a bit confusing as it could be set up for no filter or bypass or FULL FLOW FILTER! Depending, this is where it gets goofy; there is a pin on the side of the block near the rear 1/2" NPT hole and if this pin is 'IN' just over half inch she's FULL FLOW ONLY (must have a proper filter, no filter destroyed motor) that can handle this much oil, not the skinny lines in your picture. Now if the pin is 'OUT' meaning flush with the block it's not full flow filtering or any filtering.
