Signs of rust in Engine any Ideas

It sounds like you had a water leak from the intake or heads for the engine to get stuck from sitting?I had my 408 done around the same time you had yours done.I ran mine right up to October/2010(70 passes),then yanked it out and has been on a dolly in my garage all winter.(Cold Canadian winter).No condensation in my engine.Whats your engine builder saying?Is he gonna redo the engine?Somethings not right,for it to get stuck?Good luck.