My 261 came out of a '62 suburban. It had the oil cannister mounted to the intake manifold on the aft side of the intake manifold. Since this hit my steering box I was able to just make new lines and run it on the forward side of the engine. Since it just uses 1/2" NPT pipe thread on the block and filter you can use standard fittings. You can either use the big cartridge filter that comes with the engine (It's the same as the early V8 cart filter), or use a remote spin-on kit, which will bolt right up too. Just make sure you get a spin-on kit for filters with a built in pressure relief bypass, or you risk catastrophic failure if the filter plugs up. The stock cannister has a bypass built into the top of the filter.
If you run new lines you can mount the oil filter anywhere you find convenient, although it is a good idea to keep the lines as short as possible so the bearings don't run dry on startup.
As far as the oil pressure gauge line goes, you can either keep the stock adaptor which is a collar with a 1/8" NPT hole in it mounted on the return oil line, or tap a 1/8" NPT hole into the filter housing on the return side. You want the oil pressure gauge on the downstream side of the filter for the most accurate reading.
