OK, first, I did not even know that model had a return line.
But, then I own Fords.....
It should be fine to let it return to the tank, or you could just run it to the can you are using.
Either way, its a test, you're not going to be driving it around like that..........You're not me in the swamp with a hole knocked in your gas tank......
The alt squeak might easily be the noise, but it sure sounds like the starter.
If it is, you will find out the first time you rev the engine up. It will sling the windings out of the armature.
You can imagine how I know that.
You can figure out why its binding, but its a PIA.
I assume its a standard GM starter with the solenoid on top.
You can remove the solenoid, either with the starter on the truck or take it off and put it back on without the solenoid.
If you take the starter off, hook a ground to it, and briefly hook a hot lead to the S terminal on the solenoid.
The Bendix (Gear inside the end of the starter) should snap back and forth freely
There is a round hollow piece that goes up inside the solenoid that engages the starter when you turn on the solenoid.
After you get the starter on without the solenoid, pull that piece back and see if the Bendix engages the flywheel smoothly, and disengages it smoothly.
A little roughness on the engage, is OK, but it should slide out easy when you push forward on the piece.
In other words, that spring inside the solenoid should be plenty strong enough to push it back and disengage the starter.
If you did not find one inside there, you have found the problem.
If it binds on the release, and the binding is not in the starter linkage, then you may need to shim the starter one way or the other.
Assuming, of course, that the gears look OK when you take it off.