I've built several later 261'a with the plug.On one engine,the dowel was in the out position,supposedly to bypass the full flow filter.But on close inspection,you can see the dowel plug blocked the internal oil bypass,so the oil flow would have to go through the filter,then to the engine.
I would say to check out the situation first hand before attempting to drive in the plug.These engines have been out of production for nearly 50 years,all kinds of stuff may been in the past.No one over the phone or internet can see what ya got.
