So first of all --- you're doing fine. All of us on this forum have walked in your shoes... And EVERYONE starts somewhere.
Okay -- I several things I don't like - and you won't like what I don't like. The motor has been scraped in the valley.... with a scraper. That tells me that someone has been in there and did a "quickie" clean up and if they had to use a scraper to clean up in the valley -- that tells me there was heavy sludge build up. That's never a good sign of health. That's the sign of a motor with milage and poor maintenance, i.e. oil change were few and far between.
The other thing I'm seeing is heavy carbon on the piston tops... which is an indication that it's been running "rich" and there's probably also some oil usage...
At this point --- If it was me --- I'd be shopping for a fresh "long block" - i.e., block with heads. Here's an example.
This is a quick way to get back up and running with some peace of mind that the bottom end etc is healthy... you drop it in and bolt on your accessories... tune it and enjoy. Just a thought. This example would probably just about double your power.
http://www.summitracing.com/parts/mll-bp38313ct1