Tim: The by-pass/check valve is mounted in the stock cannister mount (top). In the aluminium block there is a fibre washer and spring. If your filter gets plugged it will by-pass there. If you do not use the stock by-pass mount set-up, and you have a line restriction, the pump will by-pass at the pressure regulator located in the oil pump. (The oil pump is a displacement pump, and may take out the cover gasket if the oil has no where to go.) There is a simple solution to this, just change your oil. (REGULARLY). Just kiddin, I know you will. You have got the one of the good years of 261's. In 59' the oil pump pick-up was improved and has a baffle installed to prevent pressure loss and pump cavitation from surges and sudden stops. Also in 59' and up you have full pressure oiling to the rocker shaft and arms because of the increase in size of the passages from the cam bearings. Also new on 59' and up 261's was a new style of thermostat/housing and water pump, said to be improved over earlier designs. After 4 years of use GM finally had most all the bugs out of the 261. I have two 261's, a 59' and a 61' and really like this engine. They both have the factory oil filter.
