I'm surprised I had to educate him on the correct procedure which he insist the other way is correct. In fact after taking with 14 total machine shops not one new about it. Are machinist really getting away without cracking heads?

Most guys (me included) rarely replace guides in big block heads. I typically will bore the guide for a 1/2" od repair guide. Others use bronze liners. The oem guides are usually way off center so when you replace them you have to cut a lot to get the seats to clean up.

That being said, I am amazed at how many machine shops are still living 40 years in the past as far as technology and information goes. I am an AERA www.aera.org member and they are constantly sending out bulletins about different updates etc. I am almost certain that the info you posted about the guides comes from an AERA bulletin. I dont see how anyone can keep up with engine technology without being a member.

Actually that was a AERA bulletin but it is also in the repair manual for big blocks of that year.

Moses was this a saltwater boat? I want to take mine to the ocean but at the expense of having to go through this again I dont think i want to. Was it flushed regularly or was this for many many years of saltwater use?

Great news the new valve guide came in and it sealed the port where it would hold 30 PSI of air. I should be able to pick them up today and begin the process of putting it back together.

Gonna be putting the engine back together and if this was a car engine I would put permatex on the water jackets of the intake and of the front and rear seal would be complete permatex instead of using the gaskets provided. Since this is a marine engine I wonder if I do the same thing? The water ports on the gaskets initially didn't have it so should i this time?

Either Ultra Black or Ultra Grey Permatex or the "right stuff"

Does that mean I should put it on the water jackets of the intake?

Yes, rtv around water jackets.
And yes, use rtv on the china walls instead of supplied gaskets.

Make sure intake gaskets go around water ports on intake and cylinder heads correctly. Omce in a while you'll run into one that doesn't.
i like Ultra Black. I like engine's painted black. LOL.