I know it's a late post but,
I had the same issue with my '98 3126B. The problem with mine was a worn cylinder due to the injector not firing. The guy who owned it before me ran it for quite some time dry because there was no fuel running into it to keep it lubed, so it scratched the cylinder sleeve, and I had serious blow by.
Mechanic told me he could rebuild it, but he would only do so by rebuilding the whole motor to a tune of $9000. I bought a used motor out of a wrecked school bus for $4600 including shipping.
That was last July. Hopefully I will get it back in the next few weeks. (I learned to never tell an Alabama diesel mechanic to take your time getting it together!!)
But now I have a newer motor with less miles on it and I have the original one to rebuild on my own to make my money back. (Not to mention, 5 back up injectors that cost $300 each and some accessories I can sell on ebay!!!)