340 head gasket questions

From the pictures I would say that somebody pressure washed your block but it does not look like it was hot tanked to me. I believe a Hot tank would have taken that rust out and remover the paint.
Reach up inside those passages with a long screwdriver and break that rust loose then flush that block out otherwise it' maybe going to run a little hot. And some of those rust chunks may go to places you don't want it to like plugging up those passages from the Block through the head or into the radiator.