1988 4Runner Engine Problem

I've got a 1988 SR5 V-6 automatic trans 4Runner with a diagnosed head gasket leaking problem.

It wouldn't pass the California Smog Test, and 2 shops couldn't figure out why.
The 3rd Smog & Repair shop said their test determined that there is HC gas in the coolant which indicates a leaking head gasket.

The repair shop labor cost around here is kind of high ($120/hr), so I'm trying to decide what to do.

I guess that I could sell it as-is.
I could have the heads replaced (rebuilt or new).
I could replace the engine with a good used engine. Maybe a later compatible engine?
I could have the engine rebuilt.
I could replace the engine with a rebuilt engine.

I would appreciate any advise to help me decide what to do.
I've got about $2800 invested in it so far.

 

How many miles on the vehicle? Is it the original engine?

Depending on mileage, you could just have the heads redone. If you disassemble it yourself and take the heads to a machine shop, they will disassemble the valve train, measure for wear on those components, hot tank the heads to clean them and inspect for cracks. They also will make sure that the head to engine surface is perfectly flat, which is necessary for a good seal.

Most likely, your valve seats and or valve guides are worn and will need to be dealt with (again, depending on mileage).

Gas in the coolant is consistent with head gasket failure, but also be caused by a crack in the head.

I'm sure that other members will chime in with expertise on your generation of 4 Runner.