Hello,
Just wanted to give folks an update. I found the problem stemmed from two faulty lifters. The oil metering plate in both were installed crooked which caused the oil to pass by without proper back pressure and robbed oil to the other lifters and to the camshaft. I should have caught this when I primed the oil pump on the engine stand but live and learn.
While tearing apart I noticed the timing chain was stretched, by distributor bearings were toast, and about half of the camshaft lobes were gone. So I got a new Crower cam, cam saver lifters, high volume pump, and double roller timing set. Put it all back together and it is running fine now. I did the break in on Saturday and sounds good. Appears the main and rod bearings were unharmed.
Thanks for the help guys. Lesson learned, prime your oil system and PAY ATTENTION TO WHERE THE OIL COMES OUT!
Here is the video of the break in with no valve cover. Oil was spraying out evenly across all rockers. Some sprayed on the header making the smoke which was fun.
http://iconosquare.com/p/1122185012270691516_409702652