Congrats on a job well done!
The hose is a vent line -- goes to the crankcase ventilation hose, I think. If there is fuel in it, the regulator is leaking and needs to be replaced.
Oil burning off is normal -- can be quite spectacular if you used a lot of oil in assembly as you should.
The front cover leak, alas, is probably a rolled or cut rubber seal. This is a pain in the butt, and even my mechanic doesn't always get it the first try.
The trick is to have the head clean and dry -- wipe down with solvent, make sure the seal slot is completely free of crud. Install seal dry, no sealant, no grease, nothing. Put a tiny spot of RTV on each corner, apply the correct amount of RTV to cover or head (I dont' rememeber which now), then very lightly grease the bottom of the cover, start it on the pins, and force down and back to install. The amount of grease is critical -- you must have enough to get the cover to slide over the seal, but not so much that it will get in the slot. Probably one of those things one gets very good at with practice!
1972 220D ?? miles
1988 300E 200,012
1987 300D Turbo killed 9/25/07, 275,000 miles
1985 Volvo 740 GLE Turobodiesel 218,000
1972 280 SE 4.5 165, 000 - It runs!
Last edited by psfred; 12-09-2001 at 06:19 PM.