I used a by-pass oil filter And my motor installer ran lines from the by-pass filter cannister to the block. I guess that I misunderstood the full flow vs. by-pass oil system. Finally, I think my motor installer was clueless about the diverter on the 261 block. They know about the 235 but a full flow 261 is a little different.

I just had the motor rebuilt a second time and I found the 1/16th restriction on my block again when I brought it back to the firehouse to be reinstalled. This time, I understood what I was doing and changed it to 1/2" connections before the motor was damaged a second time!