400 Connundrum

I have a 400 that I aquired in a failed project that I bought right and put in my Demon. The problem is that when it gets up to operating temperature it 1) starts having a noise from the middle of the motor sounding like a bad waterpump bearing grinding and 2) the 40 PSI @ idle and 65 PSI @ 3500RPM goes to 10-15 PSI @ idle to 35 PSI @ 3500. There also doesn't seem to be getting enough oil to the rockers. I dumped the oil expecting to find metal, but found nothing but cam lube.
I have pulled the intake, valley pan and cam out expecting that the #4 cam bearing was suspect, but its fine. It has a mild Comp cam and lifters, 30W Valvoline and 6-7 heat cycles over about 3 hrs of run time. I'm running out of ideas. I've thought a bad oil pump relief valve might explain the oil pressure problem, but not the noise. Any other ides would be appreciated.