I agree with with brokenhead, there is to much rust in it not to pull it all apart. I would disassemble the whole engine marking where it all came from. Then using a good degreaser like Castrol or Purple power, soak the block and head and set off for the car wash. Spend a few dollars and really get it clean. inside and out plus the water passages. Be sure to wipe down the bores when you get done. Flash rust looks bad, buts its not really hurting anything. A rag with WG-40 will clean it right off. I would clean the crank, oil pan, all other sheet metal, oil pump and what ever else you take along the same way. $5 or $10 at the car wash will really make a difference. You can pre-clean the deck with sand paper or Scotch-brite pads that way all the trash is wash away.
The cam needs really cleaned and inspected, it must be super clean, 1000 grit or smooth paper should knock the rust off. If any pits are in it, replace it now. Don't try to sand them out. The picture looks like its only stained, so hopefully its ok.
Castrol degreaser is really strong and can stain aluminum, it won't hurt bearings, just discolors them. Scotch-brite or a rag will clean them right back up again.
The head is another concern, there seems to be plenty of rust on one end. All the valves need removed and cleaned. If one hangs up, you bend pushrods or break rocker arms. The deck also needs cleaned on it. A large sander works pretty good, 10" or bigger with soft sand paper (NO GRINDER), all you want to do is remove carbon and rust, no metal.
I would say your engine was partly rebuilt at one time, new rings and maybe a valve job. The trash behind the balancer looks old. If it was rebuild 100%, that would still be clean. It has some miles on it due to the carbon on piston tops. After a good cleaning, it will look a lot better and you will know more about them. Then the fun of assembly starts.
Joe
