Take some of the reddish radiator fluid and put it in a glass jar and let it set for a while. If it is trannie fluid, it will slowly separate and rise to the top. If it is rust, it will settle to the bottom. Looks like rust but do this test to be sure.
Feling heat off of the motor does nto really tell us much anything; motors are always hot when running!
When you bypassed the heater core and then drove it, and then removed the radiato cap, was there pressure under the cap?
Also, when you said that it gets hot in about 1/4 miles and 'boils out of the radiator', where is it boiling out exactly? Into the overflow tank? Do you have a picture of the radiator cap?
