Got the parts back from the machine shop today. Wondering about rust and engine paint. This is what the block looks like right now. My question is do I have to deal with this rust before painting the block and heads, and if so what is recommended? I was also looking at the POR engine painting kit. http://www.por15.com/ENGINE-PAINTING-KIT/productinfo/EPKA/
Any of my engines, just get cleaned up with a scotchbrite pad, and sprayed with Krylon Engine paint. I like the POR 15 kit.
Get a can of starting fluid and spray the oily areas. It will wash the oil off and disolve very quickly. And it's cheap!
The POR15 engine paint kit might be just what you're looking for. I was reading your POR 15 link. It says, in one of the application steps, to prime and rust proof your engine with regular POR 15 black or silver. Regular POR 15 adheres to a slight surface rust much better than clean metal so you may not have to do anything to the surface rust.
POR-15 does not adhere to clean metal. I tried that, and first time I hit it with pressure washer, off it came. So, I always put water on the metal, leave it on overnight, then brush off any heavy rust, and paint it. The stuff NEVER comes off after that. The rust basically "etches" the metal giving the paint something to stick to.