Well there's my problem. Sure am glad I posted this and asked some advice. What a mess. This is all new to me. I can't imagine this thing was running in this condition. I am hoping that all of the rot and corrosion occurred just from sitting for a long period as suggested. I wont know until I either pull it out and tear it down or get it running.
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For now I am going for the get it running and see as it is not on the top of my restoration priority list right now. There is obviously water in the oil. A good bit of it. I found a correct dipstick at the junk yard and it is about four quarts overfull. No milky look though as I had mentioned before. No separation I can tell on the dip stick. Appearance of water on the dipstick at all. But the "oil" feels extra thick and sticky, not slick. Got it all back together today and plan on dropping the oil tomorrow. Before I start investigating spark and fuel and trying to get it running, what is the best way to flush as much of the water/antifreeze contaminate out of the engine? Or should I just fill it up and plan on changing it after I get it running and let it idle for a while?