Originally Posted by Steve Baz

Things To Look For When Buying A Used Power Stroke Diesel
Turbo:

You might take the air tube off the back of the air filter and look inside of it. If there is dirt build up, that is a very bad sign, so are the turbo fins looking sand blasted or bent. A little oily film is normal since the valve cover breather exits inside the tube.
Airbox:

Check the two bolts holding down the airbox lid. If they are plastic with a square recess, it is a recalled part. The recall is expired, but without the updated lid the risk of dirt infiltration is greater, the lid was updated with more supports and the updated bolts are metal with a straight slot. If it is the old style, you spend around $80 to update it.
Tranny:

If you buy a truck with an auto tranny, finding out if it's been maintained is essential, as the E4OD is an expensive transmission. Also, (if auto) seeing if the truck has an auxiliary transmission cooler would be worthwhile. For sticks, listen for clunking when shutting off or small vibration while operating. It could be an indication of a dual mass flywheel going out. Many have replaced them with single mass units.
Rear Gear Ratio:

4:10 will pull better, get slightly lower mpg’s and run a higher RPM compared to 3:55.
Coolant:

Ask the previous owner about the coolant - have they been adding FW16 or DCA4 to keep a proper SCA level? It is very important for stopping cavitation. You can get test strips to check the SCA level from NAPA, International, or Ford. I would test the current condition while looking over the truck, the SCA level should be between 1.5 and 3.0. Also, see if it has a block heater (it was an option on 97's).
Front end:

Check the front end for wear, or have an alignment shop check out the ball joints and steering linkage (tie rod ends). If they are shot, it is spendy (all four tie rods are around $400 just for parts, ball joint labor is also very spendy)
Oil:

The questions to ask are how often the oil was changed (at least every 5,000) and what kind of oil they used (diesel rated)? An oil analysis could tell you if there might be an engine problem or not.
Aftermarket stuff:

Seeing if the truck has got an aftermarket downpipe would be nice, a chip, or gauges (pyrometer, trans temp, etc.). Ask about any added items and who installed them.
Glow Plugs/Relay:

Find out if the glow plugs are in good working condition as well as the relay. Ask if either has been changed and when. You can check the glow plug resistance through the valve cover connector if needed (http://forums.ford-diesel.com/cgi-bi...&f=21&t=005210), and the relay should have power to both large terminals on top when the key is turned on, and one of the terminals should go out before ~2 minutes.
Injector o-rings:

The injector O-rings have been known to be a problem. The new o-ring sets have a pink middle seal. If the truck has an o-ring problem, one of the signs can be a discoloration of the fuel in the filter bowl. There is a drain on the passenger side front of the filter bowl for draining water (the filter is also the water separator) and you can catch some of the drained fuel in a jar – it should be dingy yellow and not blue or dark.
Leaks and Drips:

You can check the valley between the heads of the V8 for moisture and/or fluid. It should be dry not wet. Most leaks will run through this valley and down the back of the motor dripping off by the tranny/engine coupling.
VIN number:

If you take the VIN to any dealer, they can tell you when it was built, when it went into service, and some of the work that might have been done on it. You can also run prospective VIN's through Carfax.com to see the title history.