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The starter diode is there to protect the starter from current spikes.

 

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Anyone know what this is?? My guess is a aftermarket fusible link. I'm not getting any continuity

That is your Starter Diode.
It appears you have some electrical problems from the looks of that fuse box.

EDIT: After looking closer at the pics, it appears I was mistakenly taking the Dielectric Grease for possible melting of the buss bar.
Have you checked the connections and fuses on the bar.

 

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And while on this discussion, I can’t express the importance of regularly changing your front Gear Case fluid.

The metal fines and grit in the fluid ride between the metal ring in the pic and your Armature plate, increasing the rate of wear.

 

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I've been following this thread with interest trying to understand exactly what is happening. I'll admit to having zero experience with this setup and like Jungleman I like to find solutions for problems that are low cost and work.

My first question: Is the armature coil normally proud of the case in a new front gearcase or is it flush or actually recessed into the housing?
Proud as in Raised by 1/8 to 3/16 depending on model.
Second: What would make the coil rise out of the case? Does the coil expand with age or deterioration and force itself out? Does it get loose in the case by shrinkage? Does the case expand with heat from use and allow the coil to come free.
The coil which is the black ring in the pic is a sealed item, I have seen it happen in a couple of cases.
And the best answer I can give is, whatever chemical the owner sprayed on it deteriorated the epoxy that holds it in place.

Third: The OP said that he attempted to use a heat gun to warm the case and expand it to press the coil back in. Given that statement I am given the impression that he actually machined the case so that the diameterof the recess (bore) the coil is pressed into it is now large enough so that the coil fits into the case. I did not get the impression that he machined the coil itself, but perhaps I am mistaken.
He machined the face of the steel ring that surrounds the coil.

Forth: If in fact the coil had actually come out of the machined recess in the case, what caused it to do so? Did the gearcase get so hot while running that it expanded enough to reduce the pressure of the factory press fit to allow the coil to pull itself out of the case by magnetic force?
If that was the case I believe that machining the case will not be a long term solution and that the press fit is now so light that once the unit is run for a while and heats up the coil will come unseated again. (as a point of reference, there are several classes of fits in engineering and all interference fits are not created equal)
Does not apply, the coil assembly did it come out. ( metal ring)

Admittedly, I am lacking a complete understanding of the situation, however, I believe that if the OP had heated the case to a higher temperature that could be attained with a heat gun (which might also mean replacing the seal) and freezing the coil he could have likely pressed it back in without machining the case. Of course there is no guarantee that the problem would not return if the case got hot enough in use for the problem to recur. If the hypothesis that the case got too hot and allowed the coil to come unseated is accurate, then why did the case get that hot? Due to a damaged cage? Wrong lubricant?
Does not Apply, the coil assembly did not come out. ( metal ring)

If the coil comes loose again after the case was machined (the OP's repair), or if the case had been heated enough to allow the coil to be pressed in again as it was from the factory, perhaps some retaining compound such as an epoxy or some type of Loctite retainer could be used to prevent recurrence.



Bartosh, if you can, please attempt to post your pictures again but use the advanced mode so that they actually show up. Apparently there is a "glitch" in the Forum that prevents posting of pictures unless you Go Advanced.

Thanks in advance for any clarification.

See remarks......

 

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Hmmmmm, I was under the impression that it was the protruding coil itself that was turned down flush. Is that not what was done here ?

The “coil” is the larger black ring in the pic. You never want to do anything to it.
The protruding metal ring is that way for a reason.
Machining the raised height off of the ring, changes the stackup height, creating some really loose tolerances and problems.

 

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View attachment 124515

first try was to heat up the housing with a heat gun and press the coil plate back in.....Fail! Second try, chucked up the housing in a lath and turned down the extra materiel. Put it back together and i have a working diff!!

You do not turn down the metal ring that surrounds the coil, flush with the housing.
The height is there for a reason.
Your stack up height is now off, allowing the Sprague to slide more, and the Armature plate will start to dig into the aluminum causing erratic engagement.
If it is working it will be short lived.