That flange is looking a little crusty where you can see the middle bolt going through at the gasket. Is it leaking there or it at the bottom where the pipe would be sagging? A leak will also bring air into you system and confuse the o2 sensors. Did you check the condition of your ignition coil?

The leaking all around the connection. The gasket is a fiber material and I would have expected it to be reinforced with metal. I'll have to see if I can bend them together better. I did not check the ignition coil, since I was told the ignition coil and alternator were both replaced before I bought it, but I think checking the ignition coil will be a good idea, thanks for the suggestion.

Thank you. I read on another feed to plug in the seat belt, pull the PLC fuse, turn the key wait for 2 beeps, turn the key back, plug in the fuse, and the computer should reset. I looked through the shop manual and didn't those steps. The battery has been disconnected during all the repairs.

I personally never heard of that. At the dealership we just either disconnected the battery or used a scan tool to reset the computer

This project has turned from small to large. I fixed the exhaust gasket leak and once the truck warmed up, there was lots of white smoke coming from the exhaust which smelled like burning antifreeze. I collected the liquid coming from the exhaust pipe and it was not gasoline and smelled like burnt antifreeze so I assume the head gasket blew. I disconnected the fuel pump fuse, opened the throttle wide open, disconnected the ignition wire, and removed all the spark plugs to check the compression on each cylinder. I cranked the engine for three sets of eight revolutions for a stable compression reading. After checking all the cylinders, I added 1mL of oil to the three low cylinders to determine if the low compression was from the rings or head gasket. The compression result in parenthesis is from the oil addition. The compression is as follows:

Cylinder # Pressure (psi)
1 180
3 120 (150)
5 200
7 155 (170)
2 180
4 185
6 175
8 160 (180)

Cylinders 1, 3, 5, 7 are greater than 23% difference, but cylinder 3 did not have a significant increase with the oil addition. Cylinders 2, 4, 6, 8 are ok. My guess is the head gasket is blown on cylinder 3. I'm going to replace the head gaskets. Let me know if this does not make sense and it might be something else.

You have a high of 200 on 5, and a low of 120 on 3. That is too much of a difference to tolerate. Numbers on 3 and 8 came up pretty significantly on the wet test. That indicates rings, with one cylinder on each bank. I would be tempted to do a leak down test, and see if you have some bad valves as well. (or, at least, gunked up with carbon.....)

If you are going to pull the heads, I would just replace them. The stock heads are rather prone to cracking..... it's a known weakness. New heads run 600-1000 bucks for a pair, new castings, thicker decks. (less prone to cracking.) Looks like you are also in need of rings..... I would be tempted to look at the cost difference between rebuilding what you have, and just putting a long block in it. Granted, the rebuilds come with reman stock heads...... but, take good care of it, and it's good for another 100K miles or so, at least.

Can you explain the long block? Are we talking like an engine different than the 318/360 or is it a type of 318 bottom? Anything special you have to do to drop one in (mounts/electronics etc)

Long block is a motor without the heads. You can get them in 318 or 360 form
It is the same as your motor so no special mounting bolts in just like the factory motor

Short block is motor without heads. Long block has 'em. They usually don't come with the tin though. (oil pan, valve covers, etc) Or the intake/exhaust manifolds. Transfer everything from the old motor, to the new motor, drop it in (with the required new parts for the warranty) and drive it away.

I honestly didn't know that the one long block I ordered had everything but the heads on it. Good to know as always you are informative