Man, that's sad. Somebody either didn't know what they were doing, or were trying to "band aid" an engine that was seriously damaged (overheating?). Not trying to rain on your parade, but my prediction is that this engine will continue to be problematic. For one thing, the head doesn't look right in a few spots. If you have it milled (or the block decked), what will that do to your CR and how will the engine respond? Even if the headgasket repair goes OK, you still have a problem with the sleeves. You know that the rings aren't creating a good seal because the pistons protrude past the tops of the sleeves. This will probably result in some pretty unusual wear patterns as the miles tick by. You are probably already using some oil, and the compression test results that you posted in the last thread were all over the place.

Again, not trying to be a downer, but I think that this engine is a loss.