Damn these r all great answers. An update on my retest. With the inlet hose disconnected and pinched no pressure loss overnight. Confirms what cpqtim just said. I'm just about ready to give up. i trhink the motor is going to come out and my dyno guy can run it test it rip it apart etc. etc. Whew this just SUCKS!!!

Can you try your air pressure leak test with a warm/hot engine. I've heard of cracks 'opening' with heat and 'closing' when cool.

like marty and tim t. said, if you can run the engine heat it up and get another test on it you may see something. you may want to have a mechanics stethascope on hand if you need to pull plugs and listen to each cylinder or the distributor and listen for a leak inside the intake valley. the good thing about cast iron is that it holds heat for a long time.

What is the color of the plugs? "Washed" plugs don't really look bad... in fact they look fine. Do they have a light dusting of carbon on them?
What did you use to "cut" the emulsified oil and clean out the engine after your first teardown? Is it possible you didn't get all the goo out and clear the contamination?

BT

I was having trouble at my intake.did not use thread sealer on the bolts,also can be trouble there because of the two different expansion rates if using cast iron and aluminum!