HRL's recommendation is spot on but since the engine has been rebuilt and was clean at one point, you could try some over the counter engine flush and follow it's instructions. I used some Prestone flush on an engine that sat for approx 4 yrs and it cleaned it out pretty good.
When draining the engine, remove the block petcock instead of just opening it. If the water doesn't gush out you'll need to poke around in the hole with a metal coat hanger to loosen up the crud to get it to drain out. Poke around as deep into the block as you can go. Once it's gushing out it should turn clear by the time it's done.
I like to run 160 degree thermostats in my Stovebolt engines. In hot weather my old 216 and now my new 235 runs a steady 180 on the temp gauge and about 5-10 degrees cooler in cold weather. Even at that the heater will run me out of the truck if I don't crack a window.
Good luck
Dave
