Hey Wally,
The headgasket was blown. These engines are known for it.
So I am replacing both headgaskets, cam seals and valve cover seals.
I'm also putting in a new timing belt, to be safe since this is an interference motor (I think that's what it's called if it is possible that the valves hit the piston).
As to the sump, there is a lower profile sump available that is used by the Vanagon guys who use Sube engines a lot.
I'm going to drop it in first and see how it sits, but since I am running 15" rims with low profiles, I'm pretty sure I need the custom sump.
Rob.
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