That doesn't look that bad.
If there is a burr then file it off, but if it has already been run like that it's probably good to go again.
I'll second the suggestion to find another good used cheap engine, and that one 0.060" over is not likely worth a rebuild. In most cases unless you want completely original none of the old babbitt engines are worth a rebuild. Then If you do rebuild an engine the 235's and 261's still make more sense.
If you just want an engine to run, check the clearances, and if OK stick it back together and see what you have.
Grigg
