They *recommend* not using it, but they can't void your warranty for using it. They also *recommend* only using genuine Motorcraft oil and filters. I contacted Ford and Navistar regarding this issue, and while they did not specifically recommend using biodiesel (as the owner's manual says), they did not say that it could not be used either.

Ford says: "Ford Motor Company does not recommend modifications to your vehicle. We strongly recommend discussing this modification with the Service Department of your local Ford dealership before initiating this procedure." That's their general reply to everything non-Ford.

International (Navistar) says: "The use of products such as biodiesel is at the discretion of the end-user.... The International engine warranty... is not affected simply by the use of biodiesel regardless of the product's origin."

As with oil, filters and other consumables, manufacturers don't warranty the fuel, only their products. So if your fuel (or oil or filter) doesn't damage the engine, then you're fine.

Modern biodiesel is a high tech clean burning fuel, but I think that many people have the notion that it's just dirty french-fry oil that someone has run through a filter. Bio is pure and clean, and has better lubricity than diesel and is good not only for the engine but also other parts like injection pumps. Of course, Powerstrokes don't have injection pumps. The lye used in manufacturing is only used as a catalyst, and is not present in the final product.

There's a local supplier of bio-diesel here, and he's says that everyone runs it with no problems, including lots of newer Ford PSDs. I think he even said that he has PSDs in his fleet. He only sells in bulk, but is putting up a "filling station" and I'll try it out when he does. He recommends up to 20% bio. You can run any mixture you want, but there are issues to deal with if you use it straight. For example, bio can deteriorate some rubber parts in older trucks at higher concentrations, and at high concentrations it acts like a solvent and can do things like remove varnish and buildup from parts (bad because the gunk is now free to clog up your fuel filter). Also pure bio is a bit more expensive than plain diesel around here.