Doug,
Sorry for not being clear.  It will fire and start using ether, and will run on diesel providing that the block is warm. (Temp above 60 degrees, or use of the block heater.  White smoke does come from the exhaust when cranking without ether, so I think that it is getting fuel.

John,
I have tried to restart after 5 minutes or so with no luck, unless I use ether again.  I have not tried restarting it after running it for an extended period.  I will try that. Perhaps I am not letting it warm up enough.  

When you say the "valve recession" is out  of spec, are you talking about the timing gears being aligned properly?  I could not find any information in my manual on setting "valve recession", so I am assuming that it means the same thing as valve timing?  I have not pulled the timing gear cover off to check the valve timing yet.

Thanks for the input, guys.

Dale