Phil,

I rebuilt a NA block for school and I was the better part of 2 grand into it before I was done. I might look for a good used block from the junk yard.

If you are going to get really into the motor it will be worth your time to do it right. (pistons only come in sets of 4), replace all the bearings, gaskets, etc. HOWEVER, before you drop a penny into parts, pull the crank down and the pistons out and drop the block off at a machine shop and have them check it over. Make sure you didn't do something REALLY bad.

The black to light gray crusty stuff is CARBON i.e. you were running a bit rich; perhaps related to the missing chunk?

How does the turbo look? Does the exhaust side look like it passed a chunk of piston?

Andrew