The return line from the fuel injectors is attatched to the diesel filter and I I'm wondering if it sends fuel back to the filter for some reason. Also where on the engine is the lift pump located?

 

Left side front under the injector pump is your fuel pump. Fuel comes from the tank to a small plastic pre filter to a regulator to the oil filter for warming then to the fuel pump. Their it goes to the filter canister then to the injector pump, to injectors, return line to the filter hub. From there excess fuel is returned to the tank so it can circulate. Diesels send excess fuel to the injectors where they regulate the fuel into the cylinders so when you step on the fuel petal your not waiting on the pump to supply more needed fuel extra fuel is returned which filters all the fuel and also warms the fuel in the tank. Hopefully this helps.

87 300D