Somehow this machine managed to run since 1980 without any troubles, but now you need to remount the filter/screen? Nothing has changed on the machine. I think you may be trying to reinvent the wheel here.
With the boom fully retracted, you should have the fluid almost to the top of the hydraulic tank, like 2-3" down in warm weather, a little more than that in cool weather 4-6" (warm weather makes the oil expand).
Don't go mixing around with the oil. If its ATF now, just leave it ATF.
With that screen pointing up on the bottom of the tank, it shouldn't matter if its completely submerged, as long as it can flow enough to feed the pump. If it was extremely clogged, it might not flow enough- get a new filter. But with the boom retracted- like it should be driving around- you should have all kinds of oil.
. And it turns out that the tank has to be half full of oil to completely cover that sump screen filter.
Your tank should be almost completely full of oil when driving around retracted. If you've only got a 1/2 to 1/4 of a tank of oil in it, as soon as you shoot out boom, the pump runs out of oil. Pumps starving for oil is really really hard on the pumps. Tank should be full with boom retracted. Don't trust the gauge, put a screwdriver in the tank to see how full it is.