When the alternator was checked, it was in the car, right? Were any of the wires disconnected from it for the test?

The wiring harness in your Diesel may or may not share characteristic problems with the gas-fueled 240's or those years. Look for a gray connector mounted on the firewall about midway side to side. Look at the insulation on the wires going to the engine, is there evidence of crumbling insulation?

The charging system is connected to the warning lights that you mention. Those lights (oil light is different) get power from the key in position II, and the ground side runs to the alternator. It is that thin red wire on the back. With the engine stopped, the ground is OK and the lights light. With the engine running, (1) the small current coming to the alternator from the lights makes a magnetic field on the rotor, enabling the alternator to charge. (2)The ground is effectively lost so the lights go out.

So, that thin red wire may be your culprit. If it is grounded somewhere else, the lights stay on, AND the alternator doesn't charge. If the wire is broken or not connected, the lights won't come on, and there is no charging. You can put in a by-pass wire between the connector and the alternator, and leave the old one in place but capped off.

Also, check that there is a good ground from the alternator frame to the block.

I hope this helps.

Good Luck,

Bob

:>)