361 Woes

Yes it could be valve seals. Not just one but many. I know you say it ran fine and no smoke but that doesn't mean that the valve seals didn't start to disentegrate after setting for 17 years. Once you started running it and the seals started to warm up and move a little it is very possible that one or more could begin to break apart or crack losing there ability to hold a seal. I had a winter beater that I bought from a old guy that had been sitting for who know how long and at it started right up and after I drove it for a few days it started smoking so bad that I couldn't stand it. When I started checking things out I could see the valve seals inside the springs were broken and cracked. As for the gas smell I would definetly check out the carb. Good chance of a needle and seat leaking or a power valve if that carb has one. The two items I mentioned would be the easiest and cheapest to fix. It's what I would try first if it was mine.