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I agree with Fedup that there's no connection between engine & trans for either or both type oils to mix together, Hyd oil cooler is cooled by airflow through the fins. What type valve controls FEL(scv or ind dual spool)? Shown below is a JS valve & it requires a closed center plug to operate correctly on a JD 2840
 

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Frt hyd pump that was designed to create 2250 psi is located under/in front of radiator driven by engine crankshaft via a drive coupler. Trans pump that lubricates trans brgs/gears & operates IPTO & hyd hi-lo plus supplies oil to frt hyd pump is in front of transmission.
 

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Engine oil level increasing indicates diesel is entering crankcase. Easiest thing to check for is faulty fuel transfer pump. If TP isn't the problem then I'll bet seals on inj pump drive shaft have failed. On fuel related smoke I'll suggest to check inj pump timing.
 

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Fedup
I think 1 or more of the 6 large o-rings that seal the 2 valve bodies inside the cast iron steering housing are probably leaking. I think a person with moderate mechanical skills can replace those 6 o-rings with the aid of a good work light & a long stiff piece of wire or small rod. Important part is be sure each new o-ring fits in each appropriate groove inside housing.
I'll caution if 1 or both valve bodies are removed from shaft one needs to keep inventory of location of each shim for valve bodies.

One can renew the 6 o-rings without removing the cast iron housing from tractor by removing steering wheel & adjuster nut then turn shaft with both valve control bodies CCW out of cast iron housing. Then R&R the 6 o-rings

JD utility tractor power steering valve isn't near as complicated as a 3020 or 4020 steering valve
 

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Fedup
I'm recalling 35-40+ yrs ago so you could be correct!!
Back when I served as a JD dealer service manager I had so called technicians under my supervision that couldn't repair/adjust complicated JD SCV & steering valves correctly the 1st few attempts.


I remember the 6 o-rings are no easy task to replace but not impossible for someone with patience. And IIRC o-rings are easier to R&R with cast iron housing setting on a work bench. My guess depending on """"how many yrs ago you had dealer tech replace those 6 & assembled valve for $80""" that JD dealer service manager didn't consider R&R of the o-rings that difficult either.
 

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Something I'd be a little leery of trying! Maybe with a manual and take lots of pictures of the disassembly.
JD utility tractor from '65-'82 steering valve assemblies are a lot simpler than their counterparts built in Waterloo in the similar time frame('61-'75). I'm referring to tractors built for sales in N. America that I'm familiar with not the units generally built for European sales
 

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Technically hyd oil should stop at steering valve when steering wheel isn't moving & only proceed when steering wheel is turning. Closed center hyd system is designed for oil to STOP at control valve until control valve is opened allowing hyd oil to proceed. Probably a high pressure internal leak is causing oil to heat.
 

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One thing I'd do when you are done fiddling with hay is, pull the injectors and do a compression test. Willing to bet you have weak or glazed rings and possible valve issues as well. Was the overhead ever adjusted or do you even know?
It would surprise me with 1500 hrs of use that engine would have a compression problem unless someone has been overdosing engine with starter fluid. I strongly advise to check inj pump timing.
 

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I sold New JD 2840 tractors & they were hard starting more due to hyd pump not going into de-stroke mode than due to engine problems. The ""something wrong with diesel engine smoking"" could be as simple as Injection Pump not timed correctly not something to do with compression!!!
 

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Your Kubota has open center hyd's with no need for a destroking screw. JD 2840 has closed center hyd's that was designed to de-stroke automatically when there was no demand for extra hyd pressure BUT when internal hyd leaks rear their ugly head this ceases. When CC hyd pump loses it's capability to de-stroke & drag on starter is increased one needs to manually or electronically de-stroke the CC hyd pump as an engine starting aid.
 

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My guess is rebuilding steering valve possibly wouldn't solve the whine but your technician would have better knowledge. How many hrs of use since hyd filters were changed probably not very many? The majority of my hyd experience is with closed not open-center systems.
 

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Trans pump only has a certain amount of GPM of oil it can pump. Once internal leak exceeds a large portion of trans pump GPM then frt pump starves for oil supply then starts cavitation. Closed center frt pump has no ability to suck oil IE it must have oil furnished therefore the need for a charge(trans) pump. Higher temp oil creates a larger internal GPM leak.
 

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Have you looked inside open hyd filler hole for moving oil when 3 pt is fully raised & engine is running? Does this tractor have a FEL? Best tools for hyd diagnostics are a flow-rater, 5000# & 300# gauges. There should be many threads on the WWW about diagnosing/repairing JD closed center hyd systems
 

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What type valve was utilized to control frt end loader? Sounds as if it wasn't designed for 2840 closed center hyd system or the internal seal on closed center conversion plug has failed OR pressure relief valve on FEL control valve if applicable isn't set to stay seated at 2250+ psi.
 

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Simple test with hyd pressure or compressed air applied to FEL valve "in port" with valve control lever(s) in neutral. IF when pressure is applied to in port a large volume of oil/air exits valve "return port" then valve spool to housing clearance is too much or if applicable control valve relief valve isn't holding system pressure or closed center conversion plug if applicable has failed
 

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Thanks for update. You can test hyd system by placing a jumper hose with 2 male hyd tips plugged into a set of rear breakaway couplers. Start engine activate scv control lever for a short period of time. This method oil flow will rapidly heat oil, cycle oil until one can feel heat in hose, then place scv control lever in neutral position then operate FEL control valve
 
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