Hey guys, thanks for all the responses! didn't really get many bites when I first posted about the oil filter problem. definitely made me 'pucker up' when I did the first oil change and the filter looked like that.
I checked the pictures and posts on here about the AC can, and location/ routing of oil lines. Everything is correct. 54 AC filter canister, lines from block to canister. even watched when cranking, and oil comes out the port in the side of the canister, with none coming up from the bottom.
But the pushing of oil from the bottom up does concern me and that is why I was just going to remove the darn thing.
My main concern is why is this happening? I am just not familiar enough with the internal oil passages and flow in this motor. Did a passage get plugged during rebuild? If I plug this flow, will it starve some other part? Jerry says that the flow to the bearings won't be affected, so that helps me feel better.
Something to chew on.....
Thanks guys.