I am restoring a Cat D2 J series ,, when i start the diesel engine fuel pours full pipe out the quarter inch line,that is the pipe that runs from the back of the filter housing to the transfer pump and is y-ed to an open drain, where the fuel is flowing out of.

First make sure the shutoff with the wheel on the top of the filter base is shut off good and even take the line off at the fitting up there if it still leaks or not to check if the shutoff is bad or not. If it,s ok and not leaking out of it then it has to be the transfer pump seals as it will need to be taken off and resealed or other work on it if the gears are worn. Before you take the pump off make sure before you start that the fuel is shut off under the fuel tank.

That's great, thanks for the info.