Here is a picture of the hole.

 

that does not look good looks like a crack in the block to me,but its hard to tell with all the oil an grime you should clean the spot with degreaser an post another pic to get a better look,could just be grime build up

 

casting flaw? i dont think there are any journals there. clean it up and make sure there are no cracks.

 

I have cleaned it up very well and I see no evidence of cracks, but I haven't had a chance to take a photo. In all the other pictures I've been finding of other 3800s on the internet, I see that same hole there. I'm almost wondering if it is some kind of ventilation hole or something, but it does appear to be cast there intentionally. I'm going to go over it one more time with degreaser and check everything out with a magnifying glass before I decide to continue.

Aside from that, this job is coming along quite nicely with very little setbacks. I did have the y-pipe to exhaust manifold bolts break on the driver's side manifold. When I take the flywheel to have it machined, I'm going to have them remove those bolts too (I tried and couldn't get them out). The trans is good to go with the new slave cylinder installed. All that is remaining on the engine (pending close inspection of that hole) are oil pan gasket, rear main gaskets/seals and front cover. At that point, I'll inspect the oil pump to make sure its within tolerance.

I separated the engine from the K-member and put the front wheels back on it so that I can wheel the assembly out front and give it a good cleaning. 4 years of leaking oil makes it look pretty nasty. I don't think I'll have everything back together this weekend, probably the weekend after. I've been taking my time and cleaning everything very thoroughly, again 4 years of leaking oil makes things very dirty. I'll post some pictures when I get a chance.

 

Just an update: I haven't been able to post much on here, too much going on to have the time messing around on the computer.

Regarding that hole, it leads to a hole on the bottom of the engine where the oil pan meets the block. It appears to be cast intentionally. I decided to proceed with reassembly. I have the engine and trans back in the car and everything is just about complete. I just have to reinstall the exhaust, fill the trans, bleed the clutch and brake lines and fill the coolant. I may be missing a few small items, but I will go over it with a fine tooth comb before I decide to start it back up.

I'm hoping to have the car running by Thursday.

Thank you for all your help and input on this one!