The discrepancy in voltage drop across that diode when in circuit vs tested on the multimeter does not make sense. Try checking for continuity between the diode terminals and respective connection points, e.g. check if the grounded lead is indeed has continuity to the chassis. PCB traces may be broken.
The problem with "diode check" on DMMs is that it doesn't pass much forward current through the diode. 1-2mA is typical. I've seen this many times: Diode checks OK with DMM, but as soon as you pass more current through it, the forward voltage drop climbs to 3V and beyond.
Same with using "diode check" to check the reverse characteristics of a diode. The DMM will only put 2-3V across it. Your 50V rated diode could be breaking over, or be very leaky, at 10V but your DMM is never going to show that.
Diode check is a handy function, but the user should be aware of it's limitations and not take the indication as the gospel truth.
My next pet peeve is blindly using the beeper "continuity test" on a DMM. A 10-100 ohm resistance will make them beep, the display will be near zero, and the user moves on thinking there's no problem. The continuity beeper is fine for quickly ringing out wiring (while keeping it's limitations in mind), but the lowest ohms function should always be used for checking bad/suspect connections and traces.
Not a rant at you, but just at "diode check" in general.

Anyway, the OP seems to have found his problem.