SD-220 Rebuild help

My original motor is stuck (SD-220). I bought a big pile o' parts from a guy on here, that included a rebuilt SD-220. I don't think the head was rebuilt at the time, so it needs some work--but that's beside the point (the head is in good shape though). The motor was rebuilt in the late 80's, and I guess the truck was never finished. The motor was stored with the head off, and the deck of the block has some surface rust. There is rust in the passages--maybe original, not sure. The cylinders look pretty good, but one of them has a spot in it that may not hone out. I pulled the oil pan off, and inside the pan is beautiful--looks like a brand new motor. It isn't stuck, and still has good assembly lube on everything.

So, I'm looking for recommendations for a plan of attack. I planned on disassembling the motor. I'm wondering if I should try and clean it up as best I can in its current condition at home, or take it to a shop and have it tanked. I can try and hose out the water passages, and do an at-home hone with one of those ball hones to try and clean up the bores. I'm not sure what I can do with the deck, maybe something like Roloc disks? I'm not sure how much cleaning would cause issues due to material removed.

If I take it in to a shop and have it tanked and inspected, I know the freeze plugs would be done for--but those should be pretty cheap and easy. I assume the cam bearings are non-removable/reusable. I'm not sure how much cost is involved in that. I'm wondering though, if I'm going to the trouble of taking the block to an engine shop and having it tanked and try to hone it out, replace new cam bearings and the like, should I just take in the original block from the truck and have it re-worked and swap over the internals from the rebuilt motor?

The problem I see with re-working the original block is the pistons in the rebuilt motor are all marked as .060. As I understand it, that's pretty much the end of the line for most motors. If my original block doesn't need to go that far, would it be a bad idea to punch it out that far? People say here these motors will "run forever" if well maintained, so it may not be an issue. I would very much like to avoid buying a new set of EGGE pistons.

I suppose another option is to clean up the rebuilt block as best as I can, then take it to an engine shop to hone it out. If it doesn't hone, I could have the one cylinder sleeved back to .060. I'd really like to leave the options open for a Keystone kit (or similar), so I'm not sure how sleeving figures into that. I'll probably either do some sort of forced induction, or maybe build a dual-carb intake for it.

Anyway, I'm open to ideas at this point. There's no machine shop in town, and I don't have a truck, so I'll have to cart these off in a trailer when I get ready to do so. I've called a lot of shops and they want to see everything first.

Here's some ideas for the rust removal...

I've done this on sheet metal and it worked great! I took my palm finishing sander and using 220 & up garnet paper got it to an almost mirror finish. That would be much safer than any type of wheel on a grinder IMO. For the passages there are wire brushes akin to gun cleaning ones that you use with an electric drill. Even with a block being dipped/boiled the passages should be checked as someone here can attest to,he had overheating issues due to a clogged passage.
I used some brass bristle gun brushes I found in a house we demo's and they did a good job on whatever it was (a pipe I think) I was cleaning inside although the brushes didn't hold up too well. Since I didn't have the rods for the brushes I used a drill bit extension,worked just fine.

Good points Scottso.
On You Tube there are a few channels that I really like and Scotty Kilmer.com is one of the best. It should be a required watch for any person starting their first encounter with anything automotive. As soon as a person starts to get "the picture" and decides to "do something" a written plan should be made. The number of systems, even in a simple truck, like an IHC, can be overwhelming at best and dangerous in the worst case scenario. A person should write down what their intentions and want-to-dos are and make a list. The list could be divided into sub lists of "Things I can do", and Things I do not have the ability to do". Don't take something apart until it has not been properly diagnosed and may notneed a tear-down. I am thinking of one person in particular who drove the pistons out of his block and broke one or more of them. Replacements are very expensive and if a person is working on a strict budget because of unemployment or other limiting factors. a big screw-up like this could stall a project or kill it. this is where all of the BS cannot get the project back on.
It is easy to tell who has a plan and who is confused by reading the posts. Make a plan and post it. It is much easier to help a person focus or encourage them away from disaster if there is something to follow. There is always a good example of the good and not so great on this forum at almost any time.
Contrary to what many persons think, the difference in cost between a well restored IH and a modified one has less and less separation, in 2014. The biggest killer of a nicely finished project vehicle is being in a rush, especially if the owner/rebuilder is learning as they go.
In the last 20 years, I have bought more than a dozen Binders and more than half of them were failed projects. Many of the projects failed because the partner, wife or parents were not "kept in the loop".
Do not start a build if your only income is publicly funded. It could be determined that you are getting too much assistance and get yourself and those who count on the money put into a bad place.
Never start a project without having about half of what you might think is the highest cost scenario in a designated account. If you are funding a smoking habit of a pack or more a day, and are able to stop, the money saved will restore a truck to show quality in a few years. I stopped smoking over 30 years ago and I put the money into an account and left it alone. The total has grown to about $70,000 and I'm alive to spend the $$ on my next Binder.

the main concern with cleaning deck surface is to not make high/low spots, if it's just light surface rust, I'd stuff a lightly oiled rag down down each cylinder to catch crap,

put sandpaper on a flat piece of 1/8" or thicker bar stock, and sand in random orbit just enough to clean it up,

if the motor has been rebuilt to 60 over, that's about it without re-sleeving, I myself would run the ball hone down each cylinder turned to lowest point, again with something in the bottom to catch crap, you just want to remove surface rust,

I bought a 53 R-160 dump truck that the previous owner tried to fix an exhaust leak by taking a grinder to the warped manifold and then to the head surface, then he stuffed JB weld into the open spots

needles to say he ruined the manifold and the head barely survived the surfacing machine at me buddies shop,

I know that any hand grinding will certainly ruin the surface that is attacked with a hand grinder. John Edwards of Costa Mesa R&D has posted several videos on his You Tube channel that show what heavy fisted persons have done. I am confident in saying, if it were possible to do an acceptable job of surfacing a block or cylinder head by hand, few if any machine shops would pay the cost of a $50,000+ surface grinder. Those roil lock surface preparation discs should never be used on any sealing surface, on an engine. A side issue that comes from the use of these abrasives is the fine abrasive dust that gets into many spaces and will destroy an engine. GM had a warranty recall for coolant leaks on the 5.7 L with EFI. The sealing surfaces were cleaned with those discs and ultimately every engine had to be replaced because of destroyed bearings directly related to abrasive residue from the "clean-up recommended procedure."
Just when I think that I have heard it all, someone comes up with a new twist. Actually, I don't care what someone does to their vehicle, I think that I should mention the bad side effects and that is all. Grind away.

I'd still use the palm sander,it's faster and easier to control the down pressure needed. The fine paper removes very little material as well,so with surface rust... Plus most have a dust collector,with my Porter-Cable after mounting the paper there was a fixture you set the sander on with "spikes" on it,push down and presto! you had holes for the dust collector. In addition to rags in the cyl's use a shop vac next to the sander pad as you go.

I know that any hand grinding will certainly ruin the surface that is attacked with a hand grinder. John Edwards of Costa Mesa R&D has posted several videos on his You Tube channel that show what heavy fisted persons have done. I am confident in saying, if it were possible to do an acceptable job of surfacing a block or cylinder head by hand, few if any machine shops would pay the cost of a $50,000+ surface grinder. Those roil lock surface preparation discs should never be used on any sealing surface, on an engine. A side issue that comes from the use of these abrasives is the fine abrasive dust that gets into many spaces and will destroy an engine. GM had a warranty recall for coolant leaks on the 5.7 L with EFI. The sealing surfaces were cleaned with those discs and ultimately every engine had to be replaced because of destroyed bearings directly related to abrasive residue from the "clean-up recommended procedure."
Just when I think that I have heard it all, someone comes up with a new twist. Actually, I don't care what someone does to their vehicle, I think that I should mention the bad side effects and that is all. Grind away.

Your mention of the "roloc" discs parallels what I observed when I worked at the Ford dealers during the 3.8 V6 head gasket recall. Surface prep with roloc discs was recommended...then after head gasket replacement, well over 90% of these engines developed a rod knock and had to have the entire engine replaced. So I don't recommend the use of those discs.

Thanks folks, I think there's some good advice here. Someone else suggested I just clean off the rust spot with a Scotch-brite pad and hit the deck with some degreaser, as these older motors may not notice any small variants. I almost hate to go through all the effort of pulling it apart if I could avoid it, as the bottom end is so purdy, but want to do it right.

The surface rust on the deck is mostly smooth, so I'm not even really sure if it would affect the motor at all. Then again, a few seconds with light sand paper would probably do the trick. Probably my biggest worry is the water jackets, other than the one rust spot in the bore. When I rotate the motor on the engine stand, I can hear something rattling around (like rust chunks), but can't see any. The rest of it is clean enough that I think it has to be rust in the waterways.

Here are some pictures I took after I got it all home of the block. The cylinder close-up is of the bad spot in the bore:

I know that any hand grinding will certainly ruin the surface that is attacked with a hand grinder. John Edwards of Costa Mesa R&D has posted several videos on his You Tube channel that show what heavy fisted persons have done. I am confident in saying, if it were possible to do an acceptable job of surfacing a block or cylinder head by hand, few if any machine shops would pay the cost of a $50,000+ surface grinder. Those roil lock surface preparation discs should never be used on any sealing surface, on an engine. A side issue that comes from the use of these abrasives is the fine abrasive dust that gets into many spaces and will destroy an engine. GM had a warranty recall for coolant leaks on the 5.7 L with EFI. The sealing surfaces were cleaned with those discs and ultimately every engine had to be replaced because of destroyed bearings directly related to abrasive residue from the "clean-up recommended procedure."
Just when I think that I have heard it all, someone comes up with a new twist. Actually, I don't care what someone does to their vehicle, I think that I should mention the bad side effects and that is all. Grind away.

Your mention of the "roloc" discs parallels what I observed when I worked at the Ford dealers during the 3.8 V6 head gasket recall. Surface prep with roloc discs was recommended...then after head gasket replacement, well over 90% of these engines developed a rod knock and had to have the entire engine replaced. So I don't recommend the use of those discs.

That was probably a bad idea, and I don't have an air angle grinder or a compressor large enough to drive one. I was just trying to think of something not as bad as a 4.5" grinder for an example. I won't use one on the motor. I've seen them used on gasket surfaces quite a bit in shops, but never knew whether they had long-term effects; sounds like they do!

I'd still use the palm sander,it's faster and easier to control the down pressure needed. The fine paper removes very little material as well,so with surface rust... Plus most have a dust collector,with my Porter-Cable after mounting the paper there was a fixture you set the sander on with "spikes" on it,push down and presto! you had holes for the dust collector. In addition to rags in the cyl's use a shop vac next to the sander pad as you go.

Furgot about my porter cable random orbit, prolly work just fine.

looking at those pics, that motor looks just fine, a little clean up of cylinder walls and top deck,

most of the water jacket holes look clean, (at least in the pics), I'd button it up and drive,