Heres an update. - I still am in DIRE need of help.

Since the post, I re-did the compression test, by the book. (Different from my first time)
All Cylinders came out at 170 psi.
When I ran the car, I took video of bubbling underneath the valve spring, and you can see water flowing in on the head, mixing with oil.
Replaced 2 sets of intake gaskets just to be sure.
Checked upper plenum for signs of water, and it was dry and powdery with EGR carbon. No coolant laying in the upper manifold, just a little oil.
Pressure tested the radiator, and the gage fluctuated slightly while the engine was running. I pulled the #2 injector power, and it seemed to stabilize.
Also pulled the #3 injector, and it didn't make much difference. #3 was where I was seeing the bubbles from underneat the valve spring.
http://www.youtube.com/watch?v=hyovsC_qdu8

Tore the engine out of the car over christmas time.
Completely tore it down, and had the block and heads checked for leaks.
All hyd. Lifters came out OK, except for #6, which came out all boogery of oil and water mixed goo.
Gaskets were 100% good. Good Adhesion, and no traces of leak paths.
No signs of HOT spots, and I have photos if anybody wants to see.
The front and rear cover gaskes were stuck on pretty good.
The head gaskets for the most part came off clean, except where it adheeded around the water jacket ports.
All bearings looked great except for rod #5, lower cap bearings were scuffed badly. Bearings fell out of the cap and appeared shrunk.
Machine shop measured the lower rod cap area, and it showed that it was Egg Shaped, and out of round.

I have a stock set of connecting rods
I have the 2170 casting crank (standard for 3800s), ground .030
I have the Correct Pistons, verified by Clevelite (0.020 over)
For whatever reason, the pistons Stick out ABOVE THE DECK of the block.
I measured my reman block, and measured the new block....They are the same deck height. So im Lost why the pistons are sticking up.
Mabee this is OK???
Without the head gasket, if you rotate the engine with the head just sitting there, all 3 pistons hit. With the gasket on, they don't hit.

The heads and block Magg'd fine. According to the shop I took them to, No leaks could be found.
No Heat discoloration of any kind through the motor, so I don't think I overheated the block.
Head bolts - new and had sealant on them from Fel-Pro.
All other fasteners were loc-tite'd.
The only gasket that I Re-used on this engine is the upper nylon plenum to lower aluminum plenum gasket, as it wasn't that old, and didn't show signs of leakage when I removed it.

So, I have 2 engines, all brand new parts, with no trouble found on teardown.
Ive got $2500 in this new one, and I can't put it back together until I find my issues.

Does Anybody have any thoughts, ideas why:
1. The pistions are sticking above the block.
2. Theories or ideas where my coolant might be coming from
Any help is greatly appreciated!!!!
Otherwise I think I may cut my losses and haul all of it to the scrapyard. Kit and Kaboodle

I read somewhere in the last couple days that the pistons DO stick up above the deck and either go slightly into the head or up to the bottom of the head (due to the head gasket height). This was read just by chance and I am by no means a hardcore engine guy so dont be hatin if it turns out I was just blowin smoke... but I did read it...

If you decide to scrap it, let me know first. I'm only about 30 minutes from the Saginaw area and would interested in buying the car.

Ever so slightly, like oh....10-20 thousanths?
It didn't hit the valves when it ran, and there weren't any witness marks on the head.
They make bearings for the 0.030" grind - Mabee I should junk the crank? I paid big bucks to have it ground, and polished.

I also paid to have the rods resized and new bushings pushed in. Apparently either #5 got forgotten, or it was weak and took a bad set?

The heads were verified by a separate machine shop as the original. He couldn't find any leaks with pressure testing, and Magg'ing the heads.
I paid $210 to have another boneyard set of heads re-done in the meantime, because I also was darn sure they were cracked because of the bubbling you can see in the Youtube video I took.

I was searching for yard motors, but every one Ive found, has had serious issues where they are either packed with dirt on the inside, OR seriously leaking on the outside.

Plus, everywhere I go...."Everybodys got a motor to sell me", Just like what got me in this hole I'm in now.

I've got around $7,000 invested in PARTS....and I have a car that doesnt run.
Where do I go from here?
C

I'll keep you in the forefront of my mind if I decide to cut my losses.

Not sure if it would be better to sell outright, or just part it out.
C

I think you are at the tipping point. Doesn't make any sense to put another dime into it. I know how you feel.. Been there, done that. You put so much money into it, it seems like you just can't justify letting it go. I say sell it to vital49 for what you can get for it.