Hi George! I know is sounds crazy but it really looked like oil. I agree it didn't make sense coming from the head gaskets, but I laid under the car while it was running and I could see black oily stuff bubbling right in the seam between the head and the block. It wasn't oil, it was antifreeze that had burned and turned black from combustion gasses forcing it by the gasket and down the sides of the block. I took a photo. Definitely not from the valve covers. Anyway, its all fixed now. I just need to find blue engine paint to touch up bolt heads. Where is a good place to buy that paint? BTW... There was red paint in the valley under the intake manifold that was a mess to clean up, It looked like someone painted the block at the last overhaul, to improve oil flow and either used the wrong stuff or didn't prep the block properly prior to painting the coating on. I will give you a call, as I would love to see you car! Do you want any of the old exhaust system? Still like new!