Here is what I found on mine.
There are some small discrepancies with what is shown in the TM's.
Basically, the ground at the engine stud closes circuits to the fuel heater element, water in fuel sensor, glow plug module and temperature sensor.
I verified all with continuity tests and tagged the ground wires with a small yellow wires for clarity.
The harness before being opened up.
About 20" into the main harness, the ground wire is spliced into 2 other wires that run back to the fuel filter assembly. They are the grounds for the top fuel heater element and bottom water in fuel sensor. The wire then carries on into the cab.
Inside the cab, it runs to the glow plug module where it shares a common terminal with another ground wire. That wire runs back in the engine comartment in the glow plug relay harness.
It is the ground for the temperature sensor (switch?) It appears someone had changed the pigtail on my harness. It is actually the only thing I have found altered so far in this electrical system.
Here is a basic diagram of the grounds.
What I had printed from the TM's. It appears ground locations vary on these and some of the circuits are missing or conflicting to both each other and to what I found on mine. All grounds are black. On the lower page one of the grounds is tagged voltage (circled in pen). Maybe they missed the (-) neg in front of it. I could see it causing confusion regardless if someone was trying to bypass the module.
I have no idea how yours is currently wired? You may want to check the fuel heating element in the filter assembly. Mine measures 2.2 Ohms. A dead short on it would likely cause the ground wire to smoke if not fused correctly.
Hope this helps.