Air in fuel line

[Ca Rancher]

I bought diesel fuel was contaminated and white smoke started blowing out like crazy. I drained it and from the filter to the engine there is no air, but from the tank to the fuel filter there must still be air in the line. I fill up the fuel filter and everything runs good, but the fuel is not replaced from the tank. You can see by the attached photo, there is an off, on and air selection on my fuel filter. Question is what do I do when turning it to air? I also see there is a nipple or something above fuel filter - and I and wondering if I need to do something with this. Any help would be appreciated.