Gator, go buy a half dozen stainless steel scrubbing pads for pots and pans, use them with a mixture of 75/25 ATF/Diesel fuel to remove the rust from the inside of the block. They do not break down into grit like 3M scrub pads do.
I rebuilt a little two cylinder Japanese diesel that had rust inside the block, it took three changes of fluid in my parts washer to get all the grit from the 3M pads out of the engine block.
Looks like you are making good progress. Good luck.
Dan.
