#1 is the oil bypass plug or pin.
It needs to be pushed IN for the oil to flow from the oil pump straight out to #3
It needs to be pulled OUT for the oil to bypass #3 and #4 which have to be plugged.
! Do not plug #3 and #4 if the plug is pushed IN !
It would stop any oil flow from the oil pump to the entire engine!
Hard to see from your picture, but it looks like the plug is pulled out.
If it's pushed in it will be recessed almost 3/4"
#2 is the remote bypass oil filter return, which was used on earlier 261s. This passage drains straight into the oil pan.
It should be plugged if no remote bypass filter is connected.
Later 261 blocks no longer had this passage drilled and tapped.
#3 is the outlet after the oil pump that goes to the full flow filter input.
#4 is the inlet for the return line after the filter.
