Well I pulled the heads and guess what? No bad head gaskets... No cracked heads... No cracks in the block... Had them pressure tested and they are good. The only issue there might be is the precups, they are actually loose and I can gently tap them out from the injector hole... Other than that, the heads are perfect... No cracks anywhere. Even the precups dont have cracks...
Only thing I can think of is when the pushrod was bad, The excessive compression caused the head bolts to stretch and loose the clamping force just enough to allow exhaust gasses to enter the cooling system... But I did not get any pressure in the cooling system... This is just really baffling... I flushed the cooling system 3 times and after 2-3 days of driving (60 miles per day) it was black again...
I let the liquid evaporate and all that is left is a very fine dark brown dust very similar to the soot left in the exhaust pipes, but not super black like the soot is, just very dark brown...
This is normal - Precups are held in by the block with a head gasket in between. I have had them fall out when I pulled a head. Since you have the heads off "just to put ARP head studs in" no reason not to send the block out to be tanked and finish off with the above advice and gapless rings.
Make sure you seal the ARP stud threads into the block with blue locktight or any other sealer except the ARP sealer garbage. They are "wet holes" and will leak coolant if you don't do something. ARP revised their instructions. Others have some wild sealing ideas like O rings. I use Red or Blue locktight depending on what's on hand and then tighten the studs into the block some. I do not expect the red will ever let the studs back out of the block...
"Well I pulled the tstat and flushed the system for about 2 hours before it ran clear... Started it up with tstat out and got no bubbles or anything..."
Clearly by this test you have no combustion leaks into the cooling system. By the amount of time to get the cooling system to run clear there is simply something in it like sat around with open cooling system for years and rusted, a massive oil cooler failure, stop leak, Dexmud, dessert sand "Marine: adapt, improvise, and overcome! Then when we get out of the s#it let the motor pool figure it out." Seriously a corrosive wiz in the radiator after taping a hose up is plausible. Beer, you name it, as sometimes engines are disposable depending on the situation.
1 box of Cascade dishwasher powder poured in, up to operating temp, cool down and then flush it like crazy.
Don't run straight water for more than 1 day for testing proposes. Aka to find leaks. Look at the somewhat rare and expensive aluminum timing cover and how hard it is to replace and imagine how fast the corrosive hard water we got out west will eat it. It has two water pump passages to the block and then a chamber with vents by the sealed coolant passage. It can be eaten up and still seal if there is enough RTV plugging the vents. Big pocket to hide junk however. (Scrap part and replacement in background.)
