(1) For 85 300D, it is just a matter of replacing the o-ring, valves, and gaskets if other parts (check the engine side and the old pump) are still okay . The diaphragm is for older diesels, not the 85 model. The valve consists of a plastic case with a rubber disk. It can go bad.
(2) The reason you want to rotate the engine, I think, is to make the installation easier. If it is under tension, it is hard to line up the screw holes and to seat the pump properly.
(3) You need a 4 to 5 inch allen wrench. The "T" handle allen should work if the length is not too long.