So I took off the oil filter housing off on my 1979 300sd in order to put a new gasket on between the housing and the block. Once it was off and I started to do some clean up on it I noticed that the the upper fitting for the oil cooler line goes right through the housing but the lower fitting seems to be blocked off. Is this part of the thermostat in the housing or is something else going on?

The Thermostat is indeed in the lower portion. The arrows at A and B show the direction of flow.

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84 300D, 82 Volvo 244Gl Diesel

Thanks for the excellent diagram.