"Ran when pulled"

4spdragtop said
What's the engine oil like? Id think if main crank and rod journals are good then finish teardown. Relap valves yourself. New valve seals, home port the heads. Lots you can do in labor and a gasket kit to help that engine.

Oil actually looked pretty good, there was a bit of sludge at the bottom of the pan but nothing I was too concerned with.

The rusty scale on the cylinder is pretty hard, not sure how to remove it without damaging the cylinder or the rings. Any ideas?