The fuel filter you have looks great, but sometime down the road though you may want to install the replaceable element kind (it looks like the one you have is not element-replaceable) like in the attached picture although price-wise you can't beat what you have. This kind allows easier replacement, a shutoff, and bleeder screws. I've been getting them from Leonard Scheaffer for about $50/ea. The replacement filter elements can be had from Napa for about $10 (Napa P/N 3264). I can't find another source for the housings though but you should only need to buy this once. Be careful of the type of filter you install also as I've been told final filter elements for diesels have a finer filtering element than those for gasoline.
Incidentally, the KE70 shown is currently in the process of getting swapped out with a KE75. I suppose I should be documenting this as well, but it seems like its taking forever as-is and I'm lacking ambition to take the extra time to document. My biggest problem was splitting the engine from the donor machine. It didn't just come apart like its suppose to. I had to pull the plug from the clutch housing and remove all the clutch-to-flywheel bolts (a real PITA since there is barely enough room to get a wrench in there let alone swing it at all and then remove the bolts) and then separate the engine from the clutch housing. Since this was my first clutch ever, it was an unfortunate and unexpected problem. I ended up ruining the clutch disk using a puller, heat, and small sledge hammer to finally break the clutch from the transmission shaft. Yup, the throw-out bearing was gone too.
I'll try to get some pix when done with everything. I just need to clean and paint the KE75 and start going back together with it. I added a thermostat housing from another machine and this is causing some fit-up issues with injector lines. Not sure what I'll run into moving forward. You can also install a thermostat in the original hose fitting to the cylinder head but then you're back to removing the high-temp switch since there is not enough room for the thermostat and temp switch in the cylinder head void.
The KE70 runs, but is a dog on the low-end. It has terrible blow-by out the valve cover. I've concluded it is either 1.) pistons too out-of-round 2.) cracked liners that appear to have been installed by someone. Either way the fix will be expensive. It was cheaper and quicker to find a good running donor in this case and the extra power afforded by the 75 will be welcome. I went through the valve job and new rings thing on the KE70 with little difference. Surprisingly the compression readings were good which I posted elsewhere. I never did a "blow-down" test though.
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