I unloaded the 261 today. After a little closer look I'm cautiously encouraged. Pulled the valve cover and it was amaizingly clean along with the valvetrain. NO sludge. Also tapped the valves with a deadblow hammer and no stuck valves. Just to be on the safe side I squirted a generous amount of transmission fluid on the valve guides. Also pulled the plugs and they were all black from a rich condition but no signs of oil burning. I also squirted a few ozs of tranny fluid in the cylinders before reinstalling the spark plugs.
One odity that I recall reading about (HotRod Lincoln ?) was a crimped off vertical line under the valve cover. I'd be interested in hearing the "why" for that.
Paint, it appears to be original engine paint. If not the engine was hot tanked and then repainted. To get a true color I sprayed a bit of brake cleaner on one spot and the paint instantly looked new (green) and got sticky. Not sure what that means so far as kind of paint, or if it's a clue of factory paint.
I was going see if it'd spin over while the plugs were out but the crank bolt was missing in the harmonic balancer.
Water Pump, to my uneducated eye it appears the water pump is in the same location as the one on the 51's 216. Pretty tickled about that.
I'm generally a pretty optimistic person and currently I'm pretty happy with the possibilities of this engine. The proof will be in compression test and partial tear-down. Soon I hope.
