ok, after ALOT of thinking, and having to remember back over a month ago when i installed this engine, i figured out what the plastic is. every mechanic has a big screw up and this was mine. i need to install "remove before flight" tags on all my plugs and caps.......
yes, it is a plastic plug. when we resealed the oil pan, i removed the oil filter to make it easier to access the bolts. well since it was hanging from the crane still, it was dripping out the filter header. so i put a plug INSIDE the threaded portion of the header. somehow this plug must of got spun sideways and let pressure through for the test drive but once the engine got hot and the plastic became maliable it got pushed into the galley.
it sucks but atleast i figured it out, the engine survived, and even after all the trouble, the owner DID give me some more cash to cover the 160 bucks i had into it the second time to reseal it again, and some to cover my time. now granted i had around 15-20 hours into trying to figure out the issue, from replacing the oil cooler, to doing the oil pump in the truck, to completly removing the engine and checking everything.
all ends well, the 17 year old kid is happy to have his truck back and i am happy to have my bay back.