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FWIW I did a lot of head gaskets on Ford's 4.6L and 5.4L, probably 2-3 a month for about a year and a half. The accepted practice to clean them was a die grinder with a scotch Brite wheel. Warranty would only allow it to go to a machine shop if it came back. I never had one come back. The finished surface looked about like yours did after the sanding.

My Neighbors love me! I expect a privacy fence will be coming up when the host next door sells. Old engine ready for analysis:

I am sure it would’ve been just fine but I am too scared of having to do this crap all over again. Haha! Sent from my iPhone using Tapatalk

I just ordered every coolant hose, thermostat (and the rear water valve), all gaskets and rear main seal. I still have to get a clutch kit, driveshaft u-joints replaced and balanced plus all brakes. I don't think the last engine died due to power valves as the manual transmission VQ35s don't have power valves. Friday we are going to tear down the old engine and do an analysis on it. I am not going to SFD or SAS, just 2" lift springs and 5100 shocks on the rear. Eventually I will do an ARB front bumper (or something that looks similar), and dual lockers with 4.6 gears. Except for lockers and armor I want this thing as stock as possible.

The bubbles coming out of your radiator suggest that combustion is leaking into the coolant, and the pudding in the cap suggests coolant's getting into the oil as well (though I have heard of some cars developing similar schmoo from doing mostly short trips and never warming up properly). Odd that the plugs look about the same and the leakdown test didn't pin anything down, though. Maybe the leak only opens up when the engine is warm? You can test the coolant for hydrocarbons to confirm that the bubbles are exhaust gas. You can also heat up a little oil (just a drop from the dipstick) on a piece of foil with a lighter to test for water. If it just gets hot and smokes, it's just oil; if it sizzles and pops like when you drip water into hot bacon grease, there's water in there.

Damn, the manual hath spoken!! Uhh, what ^he said... B

Shouldn't take too much effort. Drive your 'grinder around to warm up the fluid, shut it off, set P-Brake chock wheels, 1/2" ratchet or better yet 1/2" breaker bar. Depending on how many Wheaties you ate that morning you may need a cheater pipe on the rachet or breaker bar to get the plugs broke loose. Lefty losie, righty tightie. Make sure you can remove or at least verify you can remove the fill plug before you drain the pumkin. It would be a bad day if you drain it but couldn't refill. My notes from doing my '91 were 2.8 liters for an LSD. Drain plug torque specs as Chilton's report them are 43-72 ft. lbs on the H190A and H223B; or 29-43 ft. lbs on the C200. Chilton's also reports 5.9 pints of fluid for the rear and 3.1 if you have a 4WD. I didn't do the conversion from liters to pints but these volumes ought to get you close. No need to over fill you just need the lube up to the bottom of the fill opening as checked with your finger in the hole. Gear oil is stankie! Non-LSDs API GL-5, SAE 80W-90, LSD's Nissan Approved LSD lube. I'll be darned if I can find the API GL rating for the LSDs. Somebody else will surely throw that up if you need it.