I had noticed some soot on the block when I purchased it. It was contained to pretty much the center of the block where the intake/exhaust manifolds bolt together. While messing with the carb I witnessed a backfire through the gap between the manifolds and the soot has been ever increasing through there as well as the popping/noise. I have sprayed around the manifolds to see if there is some sort of intake leak leading to a lean condition, but the motor did not respond. So, I am thinking it is strictly an exhaust leak.
I tried to separate the manifolds since I have a new gasket laying around, but the bolts aren't having it. I do have my set of manifolds that haven't sold from the previous 235 and have been considering installing those. What do you you think?