Power steering: I don't have an Oliver but I have a Long which is the same Fiat design. There is a power steering filter in mine which is inside the power steerting reservoir. It is steel mesh designed to be cleaned out. Usually washing out with kerosene or cleaner, then blowing out with air and allowing to dry is sufficient. I would drain and replace the power steering fluid.
The power steering pump may be failing. The only cure is to replace for big bucks. At the base of the steering wheel is a power steering hydromoter which looks like the power steering pump. It may fail and also costs to replace. Is the power steering just hard to steer or does it wander, requiring constant turning of the wheel? If it wanders, there is a valve problem which I have never fixed, except by replacing the hydromoter.
Black smoke under acceleration may be caused by worn injectors. If the tractor cranks easily I would put the injectors last on the list, but bad injectors do use more fuel. You have to find a place that rebuilds injectors, then take the injectors out and have them tested. If bad, they can be rebuilt.
At the front of the tractor behind the grill there is an oil bath air cleaner, if the 1255 is like the others of that type. Faulty design IMO because the fan pulls dirty air by the air intake. The oil bath cleaner is packed with steel wool and gets very dirty, requiring the soaking in kerosene routine and bloing it out with air. AFTER DOING THIS, LET THE PACKING SIT OVERNIGHT SO THAT ALL CLEANING FLUID EVAPORATES OUT. IF YOU REINSTALL IT AND START IT IMMEDIATELY, THE REMAINING FUMES ARE AN UNCONTROLLED SUPPLY OF FUEL AND THE ENGINE WILL REV UP UNCONTROBALLY AND MAY BLOW THE ENGINE. Also, the air intake shroud may become clogged with crud which closes down the air entrance. Clean out the mess with a screwdriver and wash, allowing to dry overnight also. The symptoms of the clogged air filter are loss of power and maybe smoking. Motor won't rev up smoothly to full power.
The hydraulic oil filter on the right side of the motor in a line going to the hydraulic pump from the transmission may be a steel mesh filter or may be a spin off filter which is repleaceable, I'm not sure on that tractor. If steel mesh and it hasen't been cleaned or replaced in a long time, it may have to be replaced. If not too dirty it can be cleaned, perhaps by boiling in water with a strong cleaner in it.
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