Yeah, it's all clicking now. I had no idea why the extra port was even there. When you install the 261 on an AD, to do it right you get Dave's water pump adapter plate, then order a 1953 water pump. This puts the fan in the center of the radiator allowing for better cooling. Since the 1953 water pump does not have two ports on it, its a mute point for us AD enthusiasts.
Nonetheless, our 261 document is not about the AD, so I am in the process of getting the parts together to show exactly how your system works. Thanks for that Matt.