Oil is drawn from the bottom passenger side of the pan into the largest fitting. A bung needs to be welded into the pan. A screen or pre-filter of some kind should be fabricated and incorporated into the pan pick-up. The factory internal pick-up and oil routing through the block and front cover are abandoned.
Pressurized oil then leaves the pump though the middle fitting and is routed through a remote mounted oil filter housing (like the Precision Turbo Saver). It then can be routed through an oil cooler (if you like that sort of thing) or just go strait back to the block. On a 109 block, I have no idea where exactly it would go. Also, you can pull a small supply off the filter housing to send some filtered oil directly to the turbo (Again, like the Precision's Turbo Saver).
The small fitting is the bypassed oil to help maintain maximum desired oil pressure . That can be directly returned to the oil pan or used to oil the cam sensor or timing chain.
The allen head stud and lock-nut is to set you max pressure.