The crack seeps/beads water along the driver side as the block warms and the water pressure builds. Once I saw the beads, it became pretty clear that it was a solid (and long) crack.
The motor has been sitting outside. I pulled the cover and the rockers/valves seem normal, albeit a bit dirty. My estimate of $600 in machine work was for a deck and bore job. Trying to keep it as cheap as possible due to our current economic situation. What I keep bouncing back and forth on is spending approximately $1300 for a 235 (again, assuming around $600 from the machine shop and a basic rebuild kit of around another $600, plus odds and ends, and transfer as many of my internals as possible) or getting that LS ($400) and run a carbureted set-up ($600 intake + MSD 6LS, + $100 for weld in mounts + $??? bellhousing, if necessary) and run a modern 20mpg, nearly 300 hp motor for a few hundred more.
Another option that came up was a shop in Kerrville, TX (about a 5-6 hr. drive for me) that may provide 3 options: 1. build up 235s; 2. 235s taken out of driving vehicles; 3. Ready to machine blocks. I'm really interested in option 2 because it would yield a driver for the lowest cost and allow for a future rebuild or LS swap when my wife goes back to work.
