Ok, I've got to chime in on this one. I've got one on the stand right now that was in the same boat. Sat for a long time, dry and in the shop. Busted it off in the floor and wow, ran great. Had a few leaks, but not bad ... through it in the truck, and drove it for three days and ran super. Day three the head gasket let go in a coolant passage where the sealing ring had rusted out from sitting dry for so long ... Crap! Yanked it out, put it on the stand and yanked the heads in three hours ... practice makes perfect.
Anyway, as good as it ran, the deeper I went, the more I found to fix. Everything was just on the worn side of the tolerances and the upper halves of the rod bearings were just into the copper. The upside was that there was sooo little ridge, that with a good honing, you could hardly feel it.
The long and short of it is that for about $600, it'll have rings, bearings, valve job + all new gskts and seals. Now for the big PLUS. I know I'll have a good engine and I have a turbo, pump & injectors on the shelf that I won't have to wonder how long it'll last when I stick it back in the truck next week.
These are amazing engines ..... they usually run great until they just die! But you can bet, if it leaks from every pore, then this engine is telling you that it needs attention because these engines just aren't leakers. Just my .02 worth