The GM diesels that were thought to be sleeved gas engines were in fact diesel engines from the get go. They had a superficial resemblance to the Oldsmobile V8, because they used similar bore centers...and it was Olds engineers working on the design. But the block was very much heavier and looks were the only major similarity. The dependability problems were legend, but like everything made at the time, sometimes you'd get a good one, and if taken care of it would soldier on. The rest, were just not quite ready for prime time. They did get exceptional fuel economy though. A four door Cutlass body about seventeen feet long, and weighing near 5000 pounds might get 25 mpg with that diesel. If the engine stayed together it might get 150,000 miles. Not bad for a time when gas engines were often done for at 100,000.
Another problem that plagued these engines that wasn't Oldsmobile's fault, was that at the time, a lot of diesel fuel had water in it, and the Olds engine could not deal with it well at all.