OldIHC

How much sludge can an SD220 handle?
Obviously the 220 can handle lots of sludge. I would be concerned about the sludge blocking the oilpump pick-up. I would advise cleaning the oil pan and not disturbing anything else until the engine gets rebuilt.
If this was my engine I would be installing a 185* minimum thermostat. A first oil-change at 500-1000 miles is a good idea.
It is very unlikely this engine will ever see that level of sludging again. Modern fuel does not have ethyl lead. Ethyl lead was the source of the sludging and it was an inexpensive way to raise the octane in fuel. Thousands of persons died from being poisoned by the ethyl lead. It used to be said, "There are not old mechanics." The ethyl lead was the reason. Wear nitryl gloves to protect your hands. If you get enough lead into your system, your pecker will stop working first, then other organs will follow.
When it comes to the filter, totally plugged will not restrict the engine oiling system. The filter is a by-pass. Google this for more information. By-pass is not a bad thing, just a little different than full-flow. Some more modern and very expensive engines have both bypass and full flow. Your engine is in good company.

My BLD's had a lot of sludge in the pan, which is why I recommend dropping the pan and cleaning it out, then throw the pan back on with the old gasket and run it for a week with fresh oil, then drop it again, You'll be suprized at how much more there is.
Old oil didn't hold sludge in suspension in the oil but let it settle to the pan floor. Newer oils (So called detergent oil) holds the sludge in suspension, which is good if the engine has a full flow filter, but less important if it doesn't.
On my engine, after two cleanings of the pan, I rolled in new crank bearings and haven't had any lube related problems.
180 deg or higher thermostat and a PCV system will go a long way to preventing sludge in the future, the PCV being key.

Thanks guys!

Finally got it. Dorman #555-045

She lives!
https://youtu.be/jKKAfPCKjEk

Beautiful truck!! So great to hear it run and see it move! Really cool to see that this rare beauty lives again. Congratulations!!

Just can't stop watching this video! The engine sounds great; and so does the horn!

Got the wrong donut gasket at the exhaust... She'll quiet down a bit.

Yes, but even with the exhaust leak, truck still sounds great!!

Sounds pretty good.