Great write up and excellent detail, Thanks!  BTW, your shop would stay a lot warmer/ cooler with some insulation (I'm sure you already know that.) I did mine top to bottom when I moved in, and I can keep cool as a cucumber wiath the ac in the summer and toasty warm with propane heat in the winter. The insulation saves quite a bit of energy too.

I plan on insulating and sheetrocking next year...it's one of those things that I didn't want to do until I had used my shop for a while.  Always moving outlets, air fittings, etc.  I've had it built now for almost a year and I still move things quite frequently. 

my shed i use for engine building, storing parts, etc. i saved news paper and packed the walls with it and there's a huge difference in temp with my propane heater but its also only 8 x 8

I've been running the furnace pretty steady for the last month or so...no problems yet. I did need to change the filter on the oil tank; it was filled with all sorts of thick sludge. Most of that was in the bottom of the oil tank I got though...I don't expect to have to change it that often in the future. Other than that filter change, I have had no maintenance or adjustments at all.
I also tested out my water trap; I poured a cup of water in the oil tank and ran the furnace for a few hours. It worked great; I got almost the same amount out of the water trap at the end of the day, and nothing in the siphon tank (some probably stayed in the tank, and some probably ended up in my oil filter). It should be able to handle about a quart at a time.
I also bought a small 12v pump for transferring oil from the barrel into my tank:
http://www.harborfreight.com/cpi/cta...temnumber=9576
This pump has a rubber impeller and pumps the oil just fine. There are a few people selling them on ebay as well. I took the battery clips off and put a 7 pole trailer connector on it; so I can just plug it in to the trailer connector on my truck. Much nicer than pumping entire barrels by hand.

thats great to hear everything is working correctly. whats the oil consumption an hour about?

whats the oil consumption an hour about?

I settled out at about .8GPH; that's adjustable with the air pressure regulator (more air siphons more oil).  That is, of course, having the furnace run for one full hour.  When I set my stat to 60 degrees, it cycles on and off quite a bit.  A couple of gallons is genrally what it takes for a full day of heat (maybe a little more if it is really cold outside). 

thats still pretty good. best of luck

Thought I would do a midwinter update
Furnace is working perfect. I've left the tstat at 45 when I'm not in the shop, and up to 60 when I'm working. Gone through a little over 200 gallons of used oil. Had to change the oil filter once (two times total now), and I had the siphon tank heater element go out (it was $6 or so at Home Depot). It looks like oil carbonized and formed a coating around the element, reducing it's ability to transfer heat. It overheated and melted inside of the carbon "shell". If I could find a cheap lower-wattage one I would put it in...but being only a few $$ at HD I'll put up with having to change the heater once or twice a year.
No other problems though...I pulled the burner a few weeks ago to inspect the inside of the combustion chamber. It was coated in a white powdery ash, but was quite clean. I'm sure I'll only need to clean it once a year. A quick pass with the shop vac should do it.
I also discovered that almost every barrel of oil I got has a bit of water in it. I just drained the water out of the trap for the first few days after a new barrel...but if there was more than a quart some made it into the siphon tank (which also has a drain, but heating it was causing some kind of emulsion to form and it was burning poorly...a slight wisp of smoke and a minor oil smell). I found that if I add a quart of isopropyl alcohol (IsoHeet at my local Napa) with each barrel it completely takes care of any water issues.
Locating used oil has been easy...I have 3 local mechanics (one person shops) that provide me with all the oil I can use. I've obtained about 350 gallons since I built the furnace.

Build a smudge pot You can also make smog with it

Spring seems to be here...using my furnace less and less now.  I thought I would post one last update on it.

I have burned around 500 gallons of oil through it this winter.  No problems at all (except for the burned out heater element in my last post).  I kept the shop at 45 degrees when I wasn't working in it, and 60 when I was.  The inside of the combustion chamber had to be cleaned ...It was covered in a fine powdery ash and was beginning to reduce its ability to transfer heat.  A few minutes with the shop vac took care of it.  I used the 12v electric pump to transfer oil from barrels in the bed of my truck to my holding tank for a while, but I got annoyed with how slowly it pumped (it could take about 2 hours to empty the barrel when it was cold outside).  I switched to an air-powered diaphragm pump.  I bought a 1/2" ARO (ingersoll-rand) pump from ebay for $120.  It works WAY faster than the Harbor Freight transfer pump...15-20 minutes to empty a 55 gallon drum. 
Overall, there is nothing I am planning on changing.  Everything works the way I want and I'm pretty happy with this setup.

Thought I would keep my thread alive...

I just added what I consider a pretty important feature to my furnace.  A few weeks ago, I got a barrel of waste oil and pumped it into my tank; the next morning, I came out to the shop to find out that sludge had completely clogged the oil filter, and my oil pump had run all night with no flow.  The pump was burned up...cost me $104 for a new one.  It got me thinking too...what if my float switch stuck, the relay failed, etc.?  The pump would run continuously until the storage tank was empty, and pump it all through the overflow on my siphon tank onto the floor of my shop.  I don't want 300 gallons of motor oil on the floor of my shop, and I don't want to buy another $104 pump.  So, I bought a time interval relay from McMaster Carr.  Basically, when the float switch energizes this relay, it will only stay on for 30 seconds, then switch off.  It resets the timer when power is removed.  Since my pump normally only runs for a few seconds at a time (when the filter is clean), the pump should operate the same as it always has.  But, if anything happens to cause the pump to run for 30 seconds continuously, the relay will time out and won't allow the pump to restart without me resetting it.  I think it is a pretty good solution to the problem...

On another note, I have burned well over 1000 gallons of oil, no other problems.