Considering it was in the junkyard sitting for who knows how long, the valves may have not been fully seated and allowed water to seep in. You all are so quick to trash the head as cracked.
from what I understood this is not a salvage yard engine, his old one was, this was suppost to be a 20,000 mile crate engine. so there shouldn't of been rain water in it
its was caused by either a intake gasket, head gasket or cracked head
