N D,
If the 261 is from 1958, it probably already has the full-flow oil system (1/2" NPT oil line holes on the manifold-side of the block will confirm this).
I have a 1960 261 from a school bus in my '54 (replacing a 235). What people have described above is a good rundown of the conversion. The water pump and pulley were the only things that needed serious consideration.
I converted to 12v and used the 1960 flywheel/clutch&pressure-plates and the 1954 clutch/bell-housing. I cannot remember if I had to swap the front motor-mount plate from the 235 to the 261 and I do know about the 216 front motor mount.
Tim
