Pulled this engine apart. Has rusty rocker arms, pushrods, rocker shafts, and heads.

What would cause this? Other than a sloppy chain, motor seems solid. I pulled the intake, and its like new there. Just the top of the head/rockers are RUSTY. Under the valve covers is also rusty.

Head gaskets maybe? But why just the top end rusty? Wouldn't the valley be rusted out too?

Motor is a 1976 360. Picked it up to replace the 318 for now until the other 360 is done. 318 finally said kafrigginboom.