Welcome to the board!

Well, you've already got the head off, otherwise I'd say to do a leakdown check, as 2 low pressures next to each other usually point to a bad HG.

Actually HG failure is common, but most typically caused by using tap water to mix the coolant with. Over time, things fail. You'll see a lot of '80's rigs with HG and TC q's here, esp with the mileage too.

Can't tell you off the top of my head about the machining questions, but ask the shop, so you know what to bring them.
Sounds like it's time for a new chain anyway; that one has finally stretched. Engnbldr will be your parts buddy. He's a retired machinist, well-regarded here for Yota parts. May as well get a water pump and t'stat too. The truck is already new-to-you, and you're already weedin' out the good, bad, and ugly! <img src="/forums/images/graemlins/baby.gif" alt="" />

You'll want to pull the oil pan off and get the chunks out of there; also a good time to check the piston skirts and cylinder walls while under there. Nice thing is with the solid axle, that'll be an easy task. <img src="/forums/images/graemlins/cheers.gif" alt="" /> The drain bolt boss stands up too high in the pan to simply flush out debris; you'll see when you drop it. Don't ferget your filter.

That's enough to get ya started anyway. Also check our tech archive here; expand your viewing window in the lower left side for some more techie stuff on this subject.