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It Looks rusty and crusty. Could Deep Creep (blue in color if I remember right) have washed the 2 stroke oil away and caused it to rust the bore? Not familiar with it.
I agree with Spare, if the crank is rusty, move on. There should have been some head gaskets when the heads came off. Those heads look to be pitted, if it was into recently someone might have tried to silicone the pitting.
Those motors use o-rings for sealing the heads, if there was silicone on them, I guess some one had patched it.
I got a 200 John rude I'll sell ya cheap if you can find a lower unit for it
I don't know for sure(Johnrudes aren't my thing) Skools or Ferm mat know better, BTW its a 25 inch motor.
You may need a cherry picker to pull the power head, you may get a head start by pulling the carbs and the reed plates, you can look in the front and see if the crankshaft is rusty