I own a 95 f250 with the powerstroke, and worked on them at a ford dealership for 6 years. The regulator you are talking about is called a fuel pressure regulator in all the parts catalogs ive seen, including Ford catalogs. But, you are right. it has no contact with fuel whatsoever. It regulates the pressure from the high pressure oil pump to the injectors, which use between 700 to 2000 psi oil pressure to fire the injectors and spray the fuel into the combustion chamber. long story short, the high oil pressure is used to amplify the low fuel rail pressure supplied to the injectors to make a mist/spray pattern from the injector that will burn nice. the "top hat" needs to be put together so that the flat part, or bottom of the hat is touching the back of the magnet that has the two pin electical connector. then the nut. the nut you used will work fine, but just snug is enough for tightening. too much will break the magnet and cause other problems.
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