Pressure test your manifolds for leaks. There are a ton of those cams running out there without dry pipes even without any issues. Personally I'd pull them and go through them.

imo,that cam with true dry exhaust should not be the cause of your milkshake.have someone do a cylinder leakage test paying xtra attention to the exhaust valves.

A few more things to throw at you in addition to things mentioned/asked above:

As a note: A leaking intake gasket from coolant port is very common on bbc's. Better gasket fit (ie: gasket you are using doesn't surround the water ports well) or sealing may be needed if this is happening.

Do you still have the factory HP500 PCV hooked up ?

Fountains sit real low in the rear. Do you have internal and/or external flappers that are still in perfect condition ?

Not sure what valve guides you have however sounds like there is a clearance issue or the bronze/magnesium/metals guides are taking a time out do to corrosion (braking down) from all the condensation.

Had those milkshakes back in the mid - late 80's and is hard on engines. That was when I learned you couldn't run a 108 lsa. Reversion wasn't discussed much then. That was trial and error days for me as well as many others.

Thanks guys for all of the advice I had stainless marine put in the new baffle that jerry uses on all of the newer pipes he makes and I also have external flappers already. I had the pcv hooked up but when I noticed the milkshake the builder put on k and n breathers. The intake gaskets that he used were felpro 1275 I wasn't real happy what I saw on the second engines looked like it could have been compromised. I bought felpro 1275s-3 this time supposed to be better.

What about the difference in water and oil temps ? Shouldn't bring up the water temps with a thermostat ? Or bring down oil temps to about 185 like merc recommends ?

imo oil temp is good but i see no reason to run a crossover in your application except for looks.if it was mine it would get a circulating pump and a 140 thermostat .

I have been thinking about going back to circulating pump. But i can't understand why for 170hrs I had no issues and now change cam which people say is fine and I have all of this reversion. I have to talk to someone else at merc tomorrow he was out sick. And I will give an update on what he says.

merc runs a circ pump&thermostat in a hp 500 for a reason,thr merc guy you are going to talk to might explain why if you ask him.