I have not read the whole post however i reciently aquired a 261 housing and although it bolts to the 235 block it uses the same gaskest from the block to the water outlet but the gaskest from the water outlet to the top thermostat cover is larger than the 235 the bottom water outlet is larger than the 235 outlet. So you can not use a water outlet from a 261 with the bypass extra port and mate it to a 235 top housing or at least with the pieces i have you cant. The tgermostat is easy to get from NAPA or the flaps usually in a day or 2 just fyi.
The thermostat housing is taller. I made my own gasket for the water housing and thermostat housing and kept a template so its easier next time. I have not found one for the 261 housing from the aotoparts store but sure they are out there.
On my application i used the bypass port for a mechanical water sensor outlet and not for the bypass hose as it was designed for. After fiquring it all out i saw last month tom from stovebolt engine company is not making a similiar after market housing also. Mine still a working in progress doing it my way. Hope the pics helps. Plus i had my 261 housing powder coated with a ceramic chrome. Cheers
