Advice needed on used crate engine...part II

I don't know, to me it looks like a used engine. I think your expectations might be a little high for a $400-$500 engine buy. I have yet to pull a used engine apart and find a tight timing chain. The oil pan indicates maintance was probably lacking. That could also be the reason for the cyclinder wear.

I think it's possible the motor could run fine in in current condition if no serious scrapes in the cylinder walls. How do the combustion chambers and plugs look?

I dont think his expectations are high at all. The motor was misrepresented!

But I do think the guy you bought from is a part's flipper. He most likely bought the motor from someone who misrepresented it to him.

There are great deals to be had. I bought a 360 creampuff which had 60 000 miles. Pulled the vc and it was clean as a new head! I paid $300..