while you have the pan off check for sludge under the bafle at the rear of the pan. it is a real trap for slug and tough to clean.
i recently had to cut the bafle and bend to get that aria clean,of coarse re weld the bafle. with modern oils you will elevate further sludge

'Does this engine have any high heat issues (hot spots) that would cause the oil to sludge up like this?"

Usually caused by inadequate crankcase ventilation, excessive blow-by, lack of service and improper oil usage (non and low detergents, especially back in the day).

When you put it back together, watch oil pressure and change the filter a few times. Of course what is knocked loose will go to the pump first.

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You can blame the quality of the oil and/or the lack or regular oil changes for the crankcase area sludge buildup.  Regarding the lack of sludge or buildups under the valve covers, I suspect that the heads have been off and/or serviced sometime in the past.
 
The problem with low mileage engines is they get serviced on a mileage interval and not a time interval.  As a result, you have the sludge buildups and accelerated engine wear that results from having oxidized/contaminated oil in place much of the time.  A good rule of thumb for cars not driven often is to just change the oil once per year regardless of miles driven.

Lorena, Texas (South of Waco)

Thought I would ask what Oil are You currently using in this Engine? We might be able to make some Recommendations.

  

theres anywhere from 4 to 6 or 7 spot welds holding the baffle in place if theres crap under it you cant get it out.you can take it somewhere and have it cleaned or in my case i use a chisel and cut them of clean it up and mig it back on.in the end its easier to have it cleaned but theres no place close to me.

On the oil question I have just been using mineral oil 10W-30. No particular brand- I just make sure it has the latest API ratings- currently  SN, SM, SL, ILSAC GF-5.  This car has really not been driven since 1975.  I had the car on jacks at my Mother's house in a garage about an hour and  half away-  I would crank it every 6 weeks or so.  I did not change the oil and filter every year-  more like every two years.  A little history- my Dad bought the car for me in 1973 from a relative (paid $165 for it) with 38,000 miles on the odometer.  The car had been sitting in their garage for a while but it ran very well.  I drove it 3 years from '73 to '75 and used Quaker State (I think) with a good dose of STP at every oil change- as I mentioned in the original post the odometer reads a little over 40,000 miles now.  The car is finally in my garage now (as of this past Tuesday) so I can drive it and maintain it better.  I've always worked on it over the years- painting, cleaning, lubrication, etc. but it stayed on the jack stands.  I will check out the crankcase ventilation to make sure everything there is OK.   What about switching to synthetic for the engine, transmission and rear end or should I start using a better mineral based oil?  BTW-  The gunking and hot water pressure washing of the crankshaft, timing chain and valves turned out good.  All the buildup that was there is gone- what I can see anyway.  The valves were much cleaner than the crankshaft- they got gunked and washed too.

When I get it started again I'm thinking about an engine flush-  like Sea Foam- just to remove what loose sludge is probably still hanging on that I couldn't reach.  Would you recommend that?   Thanks.

 

I gunked and pressure washed the underside of the oil pan baffle- thru the two holes on the end of the baffle.  I think I got it clean but I'll recheck it.  THX.

"What about switching to synthetic for the engine, transmission and rear end or should I start using a better mineral based oil?"

I would stay away from synthetic, the reason being these engines weren't sealed as well as modern engines. Synthetic has a knack for finding leak points regular oil can't. Also, most synthetics don't have the zinc & phosphorus in levels needed for flat tappet engines. You've been adding STP which is good as it does have a lot of zinc and phosphorus. I guess you could add it to synthetic but you'd still have the leak issue. If you have a manual transmission the only proper oil is straight mineral oil, non-hypoid. Hypoid oils have additives that will attack any yellow metal in the transmission, i.e., the synchronizers. Tractor Supply has the proper stuff, look for Ford Tractor Transmission Oil. The diff isn't as picky as long as you use hypoid oil of the proper weight. I'd stay away from synthetic there, too because of the potential leak issue. JMHO, others' opinions may differ.

Ditto on the previous comments about synthetic oils as most should be avoided on the older flat tappet equipped engines.  With flat tappet camshafts, you need an engine oil with sufficient shear properties to assist the rotation of the lifters on the lobes.  For this reason, always use oil with at least 30W in its weight classification.

Lorena, Texas (South of Waco)

I use Rotella-T 15w40. Designed for the Flat Tappet Type Engines. Others will offer up their Preferences.