It was the Head Gasket - leaking between 2 and 3 - certainly explains a lot. Thanks for the help, guys.

Before I start shovelling cash out the window, I would surely welcome any input or advice. Here are my plans:

Valves done/updated.
Head resurfaced, no?
New gaskets from Head upwards. All of them.
Manifold has hairline crack, that gets welded.
New oil pressure and water temp sensors.
New hoses where not already replaced.
New gasket sets for the SU's. (?)

Is it worth some form of cleaning (block interior). It's a sludge pot.

Also, when the engine was running between the timing gear install and the blown head gasket it was making a racket. Stethoscope claims it's the cam. I'll check and retorque the nut. Once torqued, is it worth drilling and wiring the nut to the cam? Should I be thinking about a new cam, pushrods, lifters?

Any and all thoughts welcomed.

Thanks again,

Craig