Oh and the engine temp was very low as the dude I bought it from had water strait from the pump with no gate valve so it was running 120 or less. I am in the process of re-plumbing the system.
Jet Fever is making me do this or he'll put me in a time out.....

The cheapest way to get some use out of this deal without hurting it would be to install a 3/4" gate valve and the associated fittings to throttle the amount of water to the engine. Basically you need to idle the boat in the water with the valve wide open, slowly closing it until you see the engine temperature start to rise. Typically a real good starting point is around the 140°F to 150°F mark. Once there, take it for a spin, the water temp should drop a little and be quite stable at about 130°F or so.
A good temporary and super cheap fix for the oil return issue would be to install some roll pins in the push-rods, this will limit the amount of oil feeding the top of the valve train with no other ill effects. Pipe cleaners have also been used with varied success. Just shove them into the push rod.
As for the oil weight, I would not run anything less than 40 wt. 15w-40, 20w-40, straight 40 would all work just fine.
You have to be real careful with that station wagon pan... Too full and it will foam, too low and you run out of oil... You should be able to run it about a quart too high and you will be better off.
As for the intake manifold end leaks, does this have an iron or an aluminum intake... If aluminum, you do not need the cookie pan.... Use nothing but RTV on the ends.
GT