1) That picture sure shows cooler to filter to engine, I have always heard the other way.
2) the fittings on the stock filter head are 5/8 NPT but if you look inside the head the oil passage is restricted to about 3/8

I would think hotter oil would flow through the filter better.
I don’t typically go with the old way thinking of filtering first in case you had a failure the trash doesn’t get into the cooler. If you have a failure no matter where the filter is the cooler and lines should be replaced.

It also offers a temp probe location easy to get to.

GLENAMY and Unlimited jd, I really appreciate your input because I now see what everyone is doing. I don't have it plumbed yet so I can and will make this change. I can see where the filter is an obstruction to flow and the warmer oil would be able to pass through the filter easier? The larger internal passages of the aftermarket Hardin filter block is an obvious and probably needed upgrade. I did buy -10 fittings for the stock filter block but never looked inside to see if there was an internal restriction. I also feel better about the advice I received earlier about using the filter block as the sensor location. It's all in the way you plumb. You can understand my confusion about that location based on the posted drawing from the company showing a different plumbing design. I probably wasn't clear on what I planned on doing. The picture is worth a 1,000 words.
Thanks again to everyone's input.

I now have new questions. I am convinced that the filter first is better than cooler first. With that said, I have attached a few pics of my engine right after I removed it. Looking at the oil cooler plumbing From Mercury can you tell if it went to the cooler or filter first? I can't find my old block adapters and don't know which is "in or out".
I sent an email to a couple places and they said the plumbing drawing I posted here is "just like Mercury does it"
Also, do you guys think running the oil through the cooler against the direction of water flow is better than with with the water flow or no difference?
Thanks for your help.
https://cimg9.ibsrv.net/gimg/www.off...eefb4d9607.jpg
https://cimg1.ibsrv.net/gimg/www.off...6aa2ccc3a5.jpg
https://cimg4.ibsrv.net/gimg/www.off...b6438ed267.jpg

The port on the outside of the adaptor would be "in to filter" and the one in the center would be "out from filter to engine (or cooler)"

So the place I bought my cooler from is not doing it "Like Mercury". Interesting..... Thanks for your help. Any thoughts on direction of flow through the cooler?

Looks like Mercury goes "with the flow of water"

Against the flow of water.

The place I bought the cooler from did say against the flow however I think in my pic the oil and water flow in the same direction? Thanks guys