Dennis, Steve: Yes, the governor linkage is certainly screwed up.
The front pulley seemed to be OK, but the key was beat up by set screws and a little worn on the sides. and the crank shaft showed signs of multiple set screw "attacks." But I would judge it normal for its age. There was also evidence of silver anti-seize compound on the shaft. The front seal was leaking.
The story at the rear was more telling. The problem was/is definitely the key --it was VERY worn on the sides and needs to be replaced. The crank itself was in great shape, it was just dirty, with a lot of grit between it and the fly wheel. The fly wheel too, looked good to me. The fact is that the "taper fit" and never been given a chance to seat and/or had easily worked itself loose.
The mystery of the sunken head bolts was resolved. The head is a "low boss" replacement for what was originally a "high boss" (or "tall boss") variety.
The head gasket was leaking a little bit.
The cylinder looked good to me, without checking its dimensions:
I found it curious that I got almost as much water as oil out of the breather. I think the engine may have been pressure washed; there was plenty of oil crud in the fins on the back side of the block.
The valves looked OK, although the exhaust valve might be leaking just a bit or about to leak.
The bottom end looked OK from the outside, and there was nothing in the pan.
I'm not sure what to do at this point. I would like to verify that the governor and governor gear are functioning properly, but I am loathe to pull the crank because that means pulling the piston and possibly the cam shaft out too. However, I'm not sure I can get to the governor without a complete disassembly, which will mean at least new rings and a hone job upon reassembly, although it quickly becomes a question of whether or not I replace the rod too while I have it apart. Half measures never seem to work when it comes to engines, but the full measure takes so much money and time. Ugh.
Edit: Shultzie, looks like great fun. I recognize the smile on your face, I have one like yours when I get to ride my Cub Cadet.
