Although the series II KT17's switched to a full pressure lube system, none of them came with oil filters. The oil filter for it is an external option and you mount it remotely. There will be two threaded plugs in the SII where the filter adapter hoses screw in to the engine. There is no way to mount the external filter option to the series 1 KT17. A filter would do it no good as its oil pressure only runs at 5 PSI, and it's crankshaft is not drilled to pressure lube the rod bearings. Dirty oil was not the cause of the S1's problems, it's low oil pressure and use on slopes are what would kill it. Putting any sort of money in to a KT17 series 1 is IMHO a waste of money. As you have found out, even with full pressure lube the KT17 series II, although longer lasting, sometimes fails in the exact manner the series 1 did, Kohler Magnum twins sometimes throw rods too. Really the only horizontally opposed engines used in garden tractors that were excellent were the Onan Performer engines.
Save up for a Honda kit. They now have a 24 HP kit out for the '82's along with the 18 HP twin. These engines really make the 682/782 tractors even better than they were brand new.
-Fordlords-