http://flashoffroad.com/Diesel/injectionpump/injectionpump.htm
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Injection Pump Housing Pressure
If the fuel return function in the injection pump becomes restricted and the internal pump housing pressure rises above the normal 10-12 psi, the injection timing will be affected. Housing pressure partially controls injection timing. More pressure retards timing, and less pressure advances injection timing. The engine will probably produce more white smoke due to lower combustion temperatures with a retarded timing. An incorrect housing pressure also interferes with the injection pump's ability to correctly meter fuel. Installing a "T" fitting in the injection pump fuel return line will allow you to test the return line pressure. The pressure should be below 12 psi. A higher reading would indicate a restricted fuel return line.
Injection Pump and Injectors
An injection pump with stuck or defective advance mechanisms can cause the engine to smoke abnormally. A timing test performed with an electronic timing set would help discover this problem. If you have a relatively low time pump and injectors, have them tested at a Stanadyne authorized re-manufacturing facility before considering replacement unless they are under warranty.
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This is how I think it works.....
The advanced piston is differentialized to the housing pressure. And I think housing pressure pushes back to retard timing from the stepper motor side pushing towards the PMD side. The transfer pump pressure advances timing and its pressure is a function of rpm since its a postitive displacement pump. It pushes from the PMD side towards the stepper motor. And I think the transfer pump is helped somewhat by the liftpump so it doesn't "slip or have pumping losses". For the timing to advance the transfer pump has to push more fuel into the advance ram mechanism and move the advance piston. In order for the advance piston to move it has to push out fuel from other side of ram into the housing and out the return mechanism. So less housing pressure would allow that to happen easier and advance timing easier. More housing pressure would make advancing the timing harder but should increase resistance to flow through and increase the transfer pump pressure (which is the charging pressure of the plungers).
The stepper motor does control the differentialized flow restriction through the advance piston and I suppose allows for corrections due to different fuel viscosities from different fuel temps/conditions ie cold start.
Looking at the return valve its just a dinky little spring/checkvalve mechanism. And i question just how accurate it is and if flowrate affects it much. Would a better regulated return pressure mechanism provide some performance gain ???