Found another post on a similar problem on a C310 with a M25XP.
The problem as described:
Well Finally closed on our 2001 310 -- We’re very excited about it and this past weekend we brought it up from Mayo (South River) to the Elk River on the Chesapeake. For the most part, the 60mn trip went very smooth, with an overnight and sunset at Still Pond. We motored most of the way in almost no apparent wind conditions. The only thing that was not good was the engine (M25XP) after 2-3 hours of running great at 2500RPM, it started to loose RPM and power for a few seconds and then recovered. It did this 3 or 4 times dropping to about 1200 each time, then ran another couple of hours great.
The second day we sailed in a wonderful N15-18 knots for about 3 hours until we got to the head of the Elk, then motored into the N/E wind, and again after about 30 minutes it did the same thing a few more times, but recovered fine for the remaining hour. When we did the boat inspection I noticed some water in the bottom of the separator. The owner must have drained the water out of the separator, and filled the tank for our use (Nice Guy) after we complained about the fact that the fuel cap was not tight, because it was clean. Unfortunately I had planed to suck the bottom of the tank out, before our trip, but now that the tank was brim full I did not want to make a mess by gaining direct access by removing the sending unit. During the incidents I did not notice any more water in the bowl, just some residual sediment.
Both filters were replaced in the spring.
So, the question is; if there is still water in the fuel than why am I not seeing more in the separator? Could it get through with out settling out, or is this not a fuel problem at all, as I'm suspecting.
Any comments would be welcome,
Thanks,
Tom
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The solution:
What's wrong when the buzzer doesn't sound
Well, the problem was the fuel pump not getting power.
-Fact, the “P” terminal of the buzzer within the control panel senses the voltage at the fuel pump. When +12v is not present at the fuel pump the buzzer sounds. This is the case when you first turn on the key switch because the low impedance of the fuel pump is actually providing the ground for the buzzer circuit.
The Fuel pump receives its power through (2) different circuits:
1)When the key switch is turned all the way (in the spring loaded position) the “S” terminal provides current from the battery through the pre-heat solenoid coil to ground. As a result the contacts close on the solenoid and provide current to the glow plugs, and also provide current to the fuel pump. (thus the clicking sound)
When the key switch is then returned to the “on” position and the push button start switch is made which engages the starter and the engine starts the fuel pump get its power from a different circuit.
2)Once the engine has started the oil pressure switch closes (> 5psi) this now completes the circuit from the battery through the “I” terminal of the key switch (“on” position) through the oil pressure switch and then through the fuel pump to ground.
The source of the open circuit was a corroded shovel connector on top of the engine that supplies the current to the fuel pump from both sources. This is a stupid place to put a connector of this type. It is exposed to significant temperature flux and corrosive fumes. I cleaned up the terminal and all works fine. I will cut out this connector and solder for a permanent fix.
I sucked the tank out from the lower bottom corner, fuel was clean.
As long as the fuel tank is more than " full it will gravity feed and run fine with no fuel pump running, but when the level goes below that the fuel lift pump must do it’s job and push the fuel.
So, if your buzzer is weak or not sounding, than check this shovel connector, it is probably corroded and not conducting, or the circuit is open somewhere else.
Tech support @ Catalina did not have a clue about what the system was telling me when the buzzer doesn’t sound when it should!!! This is obviously a diagnostic feature that was designed in that they are not even aware of. Also the circuit diagram supplied in the original manual is incorrect. It has no connection to the “S” terminal of the key switch? The diagram is also labeled “Yanmar Trapezoid” at the bottom when a Universal engine was used? I will try to draw a composite circuit diagram, as currently only the separate panel and engine diagrams exist which doesn’t correlate properly.
Hopefully this lesson learned will help someone in the future.
Tom
The whole thread can be found here (don't know if it will always be there, hence the copying of the text above):
http://www.sailboatowners.com/forums/pviewall.tpl?fno=499.154&uid=73200280089&sku=2008246194331.13Tom's solution section reflects my earlier discussion of why it makes little sense to me to have the newer engine electrical wiring system turn the fuel pump off when the spring key switch goes back to its on position after the glow plugs warm up. But. like almost everything else electrical, it's the connections.

Tom's description of the operation is a bit off, since the fuel pump actually stops when the key is brought back from the spring (glow plug) position and only starts up again when the oil pressure sensor is satisfied, not just "when the engine starts."
The wiring diagrams discussed are linked to their sources in Reply #49 above in page 4 of this thread.