As a far as Ethanol gas, I would drain all of it now.
You need a commercial water separator and contaminant filter made for Ethanol gasoline. They have the large filter cartridge.
Run a separate line to a new/rebuilt fuel pump.
Add a new fine micron filter and a new line to the carburetor.

You can try to PM Tim. Member name "tclederman". He has the 261 with the AA-1 carburetor.
He may be of more help than myself.

I'm not familiar with any Holley carburetor but looking at a diagram for the AA-1, I see:

Item 54, "Economizer Valve Assembly".
Item 53, "Pump discharge valve".
Item 60, "Pump Check Valve".
My guess is that any of these could cause leakage.

Last edited by buoymaker; 08/31/2022 3:39 PM.

"Adding CFM to a truck will only help at engine speeds you don't want to use."
"I found there was nothing to gain beyond 400 CFM."