This is a relatively simple diesel engine you’re dealing with here, so the first thing to check is the fuel supply. A dud or worn out fuel pump can mean the engine isn’t getting any fuel to the injectors, at which point it will never fire up. Even if you had a single injector playing up, you’d expect at least the odd cough from the engine as it tried to start on three cylinders, but from your description, there’s nothing going on under that bonnet.

The other common thing that stops a diesel starting is non-functioning glow plugs. These are designed to pre-heat the combustion chamber so that the fuel burns when it’s compressed by the pistons (a diesel has no spark plugs, remember). Without this pre-heating process, the fuel may refuse to ignite and the engine won’t fire. But don’t rule out the simple stuff like a blocked fuel filter that is preventing the fuel flowing from the tank to the injectors. A split or damaged fuel pick-up inside the tank can also lead to a lack of fuel at the engine, as can an air leak anywhere along the fuel line.

From what you have told us it would seem that it’s not the engine itself, the top-end has been rebuilt without solving the problem, and rebuilding the bottom-end is unlikely to fix it either. I would be looking at the places where oil and coolant could interchange, such as the intercooler, turbo etc.

THERE won't be any problems from light blends like these. You would strike problems only with much higher blends of ethanol. You would then have to consider changing seals in the fuel system. I wouldn't be concerned about the proposed blends.