Could be a collapsed hyd lifter but i doubt it... could be a busted rocker too, Probably flat cam... older small block cheyvs are notorious for flat cams... thats one reason for a roller cam...
and after rereading ur post, yeah im sure its a flat cam... uhhhhhhh careful wrappin that engine out... youll start bendin pushrods next.. pull the valve cover,,and watch the rockers..bet one or two wont hardly move,,,,or do a compression check,,it will probably show up there too....
