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It's doubtful the hydraulic fluid is transferring into the engine. I'm not aware of any connection between the two. Your engine oil rising is more likely fuel. You need to monitor that closely, since fuel diluted oil can be a major problem/expense if not soon corrected.

The loader/valve problem could be any number of things. I've seen all manner of plumbing arrangements on John Deere tractors of that vintage when it comes to operating a loader. How your is set up needs to be explained before much help can be offered there. Is there a dedicated loader valve? Is it supplied by a remote valve or is it tied into the system? Is it a closed center valve? Maybe the loader is operated strictly with the factory remote valves through the couplers on the back. ????

The dif lock issue could be as simple as stuck/rusted linkage. Does anything move either way when you try to operate the pedal?
 

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Not a "safe bet" at all. Just because an engine smokes while running doesn't necessarily point to injectors. The color and severity of the smoke, operating conditions under which it starts, changes, increases, decreases, etc? Any/all could be indicators. Starting and running characteristics, oil consumption, breather vent blow by, even certain oil and fuel leaks can be a factor in some cases.
 

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Good guess on the steering column heat having a connection to the current problem. If the steering works okay (when all else is working as well) then the steering valve probably needs seals. Not a job for a novice, so I would suggest you seek out someone locally who knows the system and has "been there, done that" before. Maybe a Deere dealer or independent shop. Someone you can have some faith in, not someone who "thinks" he can, but has never actually done one.

Removing and installing the column/valve assembly is just nuts and bolts, you can do that part should you choose. If you can't find anyone locally, there are people that can do the work if you care to ship the valve back and forth.
 

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I guess my skills are far less than moderate. I spent the better part of four hours one day trying to install the six mentioned O rings, managed to get only one in place, and that one was an accident. Manual or no manual I will probably never attempt another. The local dealership put them in and assembled the valve for $80 labor. That's my take on it.
 

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"Put loader back on and there is no difference". What does that mean?

If the loader valve is still suspect, then simply remove the return line from the valve to filter base (wherever it's most convenient) and start the tractor. If the valve is a problem you will know it pretty quickly.
 
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