To all you experienced people in 500's can anyone explain how the centrifugal oil filter works.does it need maintenance? as i have the engine out would it be wise to fiddle with it?

Dead easy. Basically as the oil comes through the dirt and debris cling to the slinger and dont enter the engine. If you undo all the bolts holding it on, it's just a case of cleaning it out. If it hasn't been done in a while it will probably be a thick sludge. There should be an o-ring around the edge

Before you take the oil-filter cover off, make a note of its position---it has one of the timing-marks on it. If the filter has not been off for a long time the muck in it will be quite hard (and look a bit like the aluminium casing)--it will need scraping out, possibly with a small screwdriver, or similar. My recommendation is that it is done every 12,000 miles, or bi-annually if your mileage is low.

Good to have a catch tray underneath as a bit of oil will come out when you remove it.

When you have it off, check the o-ring, too as it may need replacing.

Definitely worth cleaning when the engine is out every time.
Centrifugal action extracts even the tiny contaminants that paper filters allow through so it's avery good system to have.
It's been discussed before here and elsewhere.

https://www.fiatforum.com/500-classic/422661-oil-filter-clean.html

http://fiat500club.org.uk/chat/viewtopic.php?f=4&t=5223

fiat500 said:

It's been discussed before here and elsewhere.

https://www.fiatforum.com/500-classic/422661-oil-filter-clean.html

http://fiat500club.org.uk/chat/viewtopic.php?f=4&t=5223

Click to expand...

....and here, I just wrote it up with images for the 850/900 van, which is identical.....

https://www.fiatforum.com/850t-900/451538-oil-filter-questions.html?p=4278467

...and it's here too......

https://www.fiatforum.com/showthread.php?t=451692

On the top of page 2 of the Forum you will a thread entitled 'Fiat 500 Newbee' by 'Velma 1976'----go onto page 2 of that thread, I described how to remove/clean and refit the filter cover. As others have mentioned, don't forget to fit a new 'O' ring seal.

Very effective. Fiat used it on 1500, 2300, 850, 500, 600 and 124AC twin cam engine

I bought a donor 126 a few years ago and I don't think the oil slinger/filter had been cleaned for a while. There was quite a build up of crud around the periphery of the filter but the central part was quite clean, so these centrifugal filters do work.
Chris