Update: After running the engine on the dyno for only a couple minutes, we found water in the oil. Pulled the engine off the dyno right away, and once it was back in my garage, I pressure tested the cooling system, and immediately found the leak. The water was coming from in between the block casting, and sleeve. A good friend helped me tear everything down, so I could get the block back to the machinist right away. Once it was back at his shop we discussed what happened, and where to go from there. He called this last Saturday, and said he has the sleeve out and pressure tested the block, and found a crack at the bottom of the bore. Today, I brought the block home, and prepared the block to be welded tomorrow, and then I bring the block back, to have the sleeve reinstalled.
Before anyone goes off, I’m not blaming anyone. Sh!t happens. This was a used, damaged block, that I bought extremely cheap. I have less into this thing than the fully prepared 400 block I had done nearly 20 years ago. It’s just the risk you take. It’s being taken care of. Time to move forward.