Im in the middle of trying to change the oil in my '74 240D and yes this is a lousy job. After putting the oil filter housing back on, i started it up and oil leaked badly out of the housing. i suspect the o-ring is not on correctly. how is that supposed to seat in the housing?

Welcome to the wonderful world of 240D-ism! Yup, the first time you change the oil is an education.

You've probably got the canister slightly cocked. Best way to replace the filter is NOT to use a ratchet to pull the housing into place. Fit the filter into the shell. use a dab of grease on the o-ring to hold it into place, use a socket and exstension to start the threads, rock the housing while you tighten the housing as much as you can by hand and THEN use the ratchet to snug it up. You should be able to spin the housing until it contacts the engine filter base housing.

After you've done it once or twice you'll get the hang of it. Just go slow and don't try to force it.

__________________
“Whatever story you're telling, it will be more interesting if, at the end you add, "and then everything burst into flames.”
― Brian P. Cleary, You Oughta Know By Now

Are you sure that the old O-ring has been removed?

__________________
Len
'59 220S Cabriolet-SOLD and living happily in Malta
'83 240D 351,500 miles original owner-SOLD
'88 560SL 41,000 miles - totaled and parted out
https://sites.google.com/site/mercedesstuff/home
'99 E300 turbo 227,500 miles
'03 SLK320 40,000 miles - gave to my daughter
'14 Smart electric coupe 28,500 miles
'14 Smart electric cabriolet 28,500 miles
'15 Smart electric coupe 28,000 miles

The old o-ring did come out. I think Mike D hit the nail, the canister seemed like it was cocked. I had to be more careful seating it back in. The problem on this car is that the canister barely comes in an out, the lip on the top of the canister prevents it from coming straight out/down because it hits the oil pan on one side and part of the frame on the other. I had to cock the canister to an angle to squeeze it back into that space, and that made the o-ring go wacky. Like you said, an education. A very oily education.

I swear Mercedes has a policy about either putting the oil filter in a dumb location, otr having a bunch of hoses and lines run right above it