The Max Diameter does indeed include cover and core--the final covered and chafe-protected diameter should not exceed the max sheave diameter--it will do violence to your line to stuff it into a space too small, especially if you have power winches and can't feel how much force it's taking to do so.
I recommend examining the sheave box for possible chafe spots and making sure you have a fair lead before you put a new halyard through there. If using a covered DUX (or Marlow MAX or whatever) halyard, and you want Dyneema chafe sleeve but it's making the line too fat, you can strip the poly/technora cover off of the portion to be dyneema sleeved before putting the dyneema on, and your line's diameter will remain constant.
If you extend the bury of your splice so it goes through all the sheaves, this will not make anything stronger--you'll just be putting a fatter line through what will then be a smaller bend radius for that fatness of line.
I suggest finding out from an engineer what strength of line you need, size your halyard accordingly, and upgrade to a bigger sheave if necessary.
Ben
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