Engine issues

[raguza123]

As I been tearing down the 81 TA, I now have the front clip off I am now getting all the clutter off the engine(emission stuff), AC, alternator and so on, I now can see the plugs in the 305 engine, I pulled the #4 and plug was clean then pulled the #2 and water came out and the plug is fouled up with rust.
I pulled the rest and found 2 more with rust, not as bad as the #2plug.
I then pulled the pan drain and about a gallon of clear water came out then the oil came out.
What does this mean for this numbers matching TA?
Is the 305 toast?
I should be pulling the heads to see the real damage and how bad?

 

[Zimgxp]

It will need to be taken apart and checked to determine the extent of the damage.

 

[melsg5]

blown head gasket, cracked head, cracked block, etc.

 

[raguza123]

The car was sitting for about 5 yrs in a barn in egg harbor NJ

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[raguza123]

I finally tore the engine down, now I pulled the heads off, both heads will need to be rebuilt and I found this whitish tan powery stuff in cylinders #1 and 2 and 3,4,5,6,8 had liquid in it, smelled like marvels mystery oil and #7 had the power but wet in it. Bores do not look rusted and show no wear at the top of cylinders.
Still can not turn over, I'm not even gonna try, gonna pull it out the power wash and finish disassembling the block.
I gonna take some pics tomorrow of both sides.
Piston #1 has some corrosion on it so it may need a set of pistons.

 

[melsg5]

this article covers modifying the 305 for more power

http://www.superchevy.com/how-to/project-cars/sucp-1007-305-small-block-engine-build/

 

[raguza123]

heres a couple of pics:

 

[raguza123]

finally got the oil pan off, the oil pump is in good shape, and the bearing caps look in good shape. It seems to be a bore issue, but I can not figure out how the distributor got stuck and won't come out at all

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[melsg5]

it just need a little soft persuasion. Try twisting the housing to break the seal and then pull up.