Wow what a score. Even in that shape the engine is worth an easy grand. The good news is that after some clean up if should be fine. The grit that you feel is most likely the bearings being rusted. Bearings are easy to get, they are the only thing besides rings that I suggest not buying OEM. RC bearings.com is a much better route. The crank, pushrods, rocker arms, cams and wrist pins are most likely rusted as well. They typically clean up well with fine steel wool that gas been lightly oiled. The cylinder sleeves are steel as well and may need to be cleaned up too. Some oiled 600 grit on the inside bore is a good idea. If you want to replace the rings do a google search on Bowman rings. I think the most difficult task will be removing the cam bearings.