This forum and the Classic Pattern forum at RC groups are the places to start.
As far as reviving the OS+1 on what Jim said. Some will suggest a green antifreeze soak but for gummed up not run in a long time engines I think soaking them in fuel is best to get started.
I would add that you should dismantle as much of the engnie as possible before you soak it so you can check if its dammaged in some way. If it's still not loosened up after an over night soak in fuel, get out a heat gun for monkote or a hair dryer and heat it up to where you can't touch it with out gloves on. Then see if it will loosen up. If not back in for another 24 hr soak and repeat the heat.
As far as bearings may I suggest that if they need to be replaced that you go with with sheilded stainless with the highspeed retainer. IMO the front bearing should have double rubber sheilds and the rear a metal sheild on the crankshaft side.
I would stay away from anything with ceramic balls. Think of it this way, what happens if you drop a ceramic plate on the ground while standing? When I got back into the flying rc and heard about ceramic bearings I was awed by the idea of them. Balls harder then steal
, higher temp rating, won't corrode, etc.
Too make a long story short I replaced all my engines with the new-fangled bearings just to find out that with a mild prop strike on the runway, during a hard landing, they can fracture and destroy the engine just like the dropped ceramic plate. After spending all that money on the ceramic type of bearings it's my opinion that they really aren't needed. The ducted fan and boat engines back in the 80's did just fine without ceramic bearings so I can't really see the benefit of the extra expense other than bragging rights about how much you spent on your bearings and of course the awe factor.
What I think is more important is having a steal sheild on the rear bearing next the crankshaft and double sealed on the front They'll get plenty of oil from the pistons down stroke as that pressurizes the crankcase and forces the oil into the bearings. Also the steal sheild on the rear will hopefully keep the retainer and balls in the the bearing races if they fail for some reason.
For the Dalotel engine how about one an 90 2stroke or a 120 4stroke. Magnum, Evolution, ASP(hobby king), OS, YS all have reliable engines nowadays from what I have read hear. It's just how much you want to spend.
As far as a radio There's Hitec's Aurora 9 channel, Spectum, JR, and Futaba. I'm partial to Futaba but then again I was able to get a brand new Futaba 9c off ebay for $125plus shipping. If I had seen a 9 channel JR for that price when I first started looking I might be a JR nut.
Futaba does have the 8FG which has 14 channels which I think is good radio for you to start with. With S-Bus technology theres no need for having a gazillion channels anymore as S-bus allows you daisy chain as many servos as you want per channel. you'll have to check it yourself. The S-Bus rx's allow you to use analog, digital, or S-Bus servos. If I were starting right now I would give that technology as very serious look as it's the future for RC IMO.
For your grandson a 6EX or 7C 2.4 ghz can be had for a reasonalbe price off ebay. I also think their Fasst 2.4Ghz technology is very solid. They recently came out with less expensive 2.4Ghz technology called FHSS. I'd definitly check out their website cause S-Bus is really a cool technology which just came out a little over a year ago. Check it out.
http://www.futaba-rc.com/
Another plus for Futaba is the Hobbyking has fasst compatable 8channel rx's for $32. I have 4 of them and they have worked flawless so far. They also have them for Spectrum priced similarly.
Make sure u check then out and the other following websites
http://www.hobbyking.com/
http://www.nitroplanes.com/
http://www.hobbypartz.com/
Regards