Here is a link to the info on the water getting into the block on these engines. http://www.mar-fab.com/MarFab_...9.pdf
Kurt does all of our block work for us. They are a great bunch of guys down there.
I would check your pistions to see if they are out of round or not. Go with all new ring sets. Im not a fan of Boyeson reeds. Just make sure you wash out all the oil ports very well when you get the block back.