1985 ford f350 diesel will not allow the ignition to engage. Dash light says water in fuel. I put on a new fuel filter. Did not help. Can I bypass the sensor?

indicates fuel leak back and fuel pressure drop
check filter installation for seal not sitting properly, loose fuel line fitting , pump installed correctly (flow wise ), filter installed correctly (flow wise)
air getting in to fuel lines
the thing you are looking for is indicated by the initial hard start but when started runs ok ( good fuel to the engine eventually) and then by the fact that if the engine is allowed to sit for a long period the problem returns meaning that the fuel pressure is not being held
could even be a problem fuel pressure regulator allowing the fuel to bypass ( no pressure =hard starting) then gets enough pressure to run ok but allows that pressure to drain off over time

I'm not too uppety-up on diesels but I have changed a few. My description is pretty basic.
BEFORE doing anything, make sure you have at least a quart (or more) of FRESH CLEAN diesel in separate container.
Locating the filter is usually in site when opening hood and fairly easy to get to. The ones I've done, look simular to a spin on oil filter. Usually there is a valve on the bottom to drain fuel and/or water out out of the filter.
First, drain fuel out of filter,may need a hose and a catch pan so is not to make too much of a mess.
Second, spin old filter off.
Third, take your fresh clean diesel and pour it in the new filter up to being full but not running over, make sure you wet the o-ring with clean diesel also.
Fourth, spin new filter in place.
Fifth, turn ignition key to on for at least 10 seconds or more, NOT starting the engine. You should hear a pulsing sound, that's the pump priming the new filter, can't have any trapped air in system. If there is too much trapped air the engined will not start or stay running. This has worked for me quite a few times but if you want more information go to http://www.ford-trucks.com/forums/index.php and put your question in the search box in the forums section. Hope this helps.

check your alternator if it is charging service your fuel filter drain the water with the yellow tab make sure you didnt put regular gasoline in it. check your fuel inertia switch. check the fuses. make sure your fuel isnt gelling if so use power service diesel treatment emergency red bottle. Check your power to the fuse panel. check all fuseable links.

You have to drain the water out of the fuel tank. There should be instructions on how to do that in your owner's manual. The sensor is in the tank. Hope this helps.

It would definately be easier and probably cheaper to trade trucks than to change motors. You will have to gut the 94 engine compartment for wire harness, filters, brackets, rad, coolers, computer,sensors. You will need to find a way to fit warning lights into your dash because the 94 dash would be different. Check to make sure your fuse box will work with the diesel harness installed or that you can make it work. Fuel lines and fuel pump need to come off the 94. Diesel ones are different from gas. It will be a lot of work and time. For me the price would have to be real good. Hope this helps.

You need to flush your fuel system completely and get a new fuel filter.

Please don't forget to rate!!!!

Diesel Engines The 6.9L and 7.3L diesel engines use a one-piece spin-on fuel filter. Do not add fuel to the new fuel filter. Allow the engine to draw fuel through the filter.

1. Remove the spin-on filter by unscrewing it counterclockwise with your hands or a strap wrench.
2. Clean the filter mounting surface.
3. Coat the gasket or the replacement filter with clean diesel fuel. This helps ensure a good seal.
4. Tighten the filter by hand until the gasket touches the filter mounting surface.
5. Tighten the filter an additional 1⁄2 turn. NOTE: After changing the fuel filter, the engine will purge the trapped air as it runs. The engine may run roughly and smoke excessively until the air is cleared from the system.
   

YOU MAY HAVE WATER IN THE FUEL FILTER BOWL. REMOVE THE PLASTIC TOP ENGINE COVER AND UNDERNEATH YOU WILL SEE A BLACK ROUND PLASTIC FUEL FILTER COVER. UNSCREW THIS AND SLOWLY REMOVE IT WITH THE KEY IN THE OFF POSITION. REMOVE THE FUEL FILTER AND LOOK UNDER IT TI SEE IF THERE IS WATER ON THE BOTTOM OF THE BOWL. SOAK IT UP WITH A RAG OR SPONGE. THEN FILL IT UP WITH DIESEL FUEL AND REPLACE THE FILTER WITH A NEW ONE MAKING SURE TO USE THE GASKET THAT IT COMES WITH. GOOD LUCK. KEEP ME POSTED. THANKS FOR USING FIX-YA. AND THANK YOU IN ADVANCE FOR AN HONEST RATING.

Water in fuel
During refueling, it is possible for
water-contaminated diesel fuel to be
pumped into your tank. Your vehicle
fuel system is equipped with a fuel
filter/water separator to remove water from the fuel. The WATER IN
FUEL light will illuminate when the ignition is turned to START (as part
of the light function check) and when the FCM/HFCM has a significant
quantity of water in it.
If the light illuminates when the engine is running, stop the vehicle as
soon as safely possible, shut off the engine, then drain the FCM/HFCM.
Refer to Draining the FCM/HFCM and changing the fuel filters in the
Maintenance and Specifications section of this supplement for the
drain procedure. Allowing water to stay in the system could result in
extensive damage to, or failure of, the fuel injection system

I have a 1985 f250 with 6.9 liter diesel and when I couldnt get electricity to starter, I mounted
a 12 volt starter button I got at napa auto partson the dash just to the left of the glow plug light
and wired it across the selenoid switch. I still have to turn the ignition switch on first.