It is still getting air into the system, if it was leaking out of weep hole on the pump, would that allow air in? Sorry if there are obvious answers to these questions, no experience with the IP. If not, then I would guess that it is what you have mentioned regarding the olives. I have also read about an o ring on the pump that would cause this type of leak, any ideas? Thanks.
If the drive shaft seals thus weep hole is where it leaking from, then yes that can cause air to enter your system. What happens is that when the engine isn't running, fuel drips out and is replaced by air.
There are other places for the pump to leak, bear in mind the IP is pressured internally so a pump leak will generally reveal itself. An olive leak (low pressure before the IP} won't always be so quick to show you the leak. So you might or might now have fuel showing if its a olive leaking air.
It is ok to drive it in an emergency, but I wouldn't drive it much as it can saturate your clutch and cause it to slip and enough heat in the right place can cause raw diesel to burn.
$325 labor seems a little pricey to me. An experienced tech should be able to do that job in 2 hours, 3 hours max, to me that is a lot for shop rate per hour. But its Oregon not Texas so what do I know about labor there.....
