My oil filter does not look good.

IMHO, you are screwed. How bad you're screwed, depends on what you do next. Do not continue driving, or even running it. Start taking it apart, taking your time, scrutinize every part, document everything you find.
The last time I saw something like that was on a used 67 cuda w/273 I had just bought years ago. The fuel pump diaphragm leaked, pumping gas into the engine, diluting the oil and wiping out the bearings.