I'm still not sure I know where the crack is in your engine, as the only "gallery" I'm aware of is for oil, not water. There are three drilled passages above the camshaft, one that supplies oil to the cam and main bearings, and two that are oil supply holes to the lifters. Cracks around those places will either allow oil and coolant to mix, or possibly allow external oil leaks if they're at the back of the block. Either way, you've got a boat anchor.
I build engines for a few local round track racers, and the labor charge is variable according to who supplies the parts. That's normal, especially if there's a problem with quality or fit issues. If I supply the parts, they fit, and they work properly as an assembly, or I fix the problem at no extra charge. If you bring me a bunch of mismatched parts and insist that I install them, OK, but there's no warranty, and I'll charge you a bunch more for the aggravation factor. I'm not in the business of making your pipe dreams from a dozen parts catalogs a reality. If you're not comfortable with the deal the shop has offered you, pick up the pieces, pay him for what he's done so far, and go bother somebody else. Both of you will be happier for it.
Jerry
