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4bt conversions have been done in m37's many times. As far as parts availability and performance upgrades I'd go cummins and I'm by no means a cummins fanboy.
No the booster pump is a diesel only thing. The floats in the carburetor could be sticking open causing fuel to flow into the cylinders. I'm not familiar with the old gasser trucks but I don't imagine there are too many ways for fuel to enter the engine oil.
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