That's funny, I've had green stuff in my truck since 2002, when my Mr Goodwrench long block was installed. Hasn't leaked or burned any liquids including coolant since (until the head gaskets blew). When I tore down the engine to the short block a couple years ago, it was perfectly clean internally - no rust. All of the sensors still work fine. Here's a pic right after tear down with 16 years of use in the hot climates of CA and AZ. Even the valley was perfectly clean with no sludge.
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Is that a 5.7 Vortec in the photo?
Are all eight pistons identical and installed with an arrow pointing in the same direction?