I'd sleeve that block in a New York second and never look back. Done correctly, the sleeve will be as strong as the original block, and the materiel of the sleeve will be better if you get the right sleeve.
Secondly, if the pickup turned in the pump, it wasn't set up correctly. There is no way the pickup can turn if the pickup is touching the bottom of the pan, and it should be touching the bottom of the pan.
Seems silly to throw away a block. Any block you end up with will need to be decked, line honed and everything else.
