Do yourself a favor and put new guides in it. I have never seen a engine that looked like that and had good guides in it.

Stick a valve in the head and pull it out about a 1/4 to a 1/3 of an inch and push it around in all planes. I bet you get a lot of rock in it.

 

alright so to update i got my tranny back together and i just need to go get some sealant to seal the crankcase back together. next i need to get the cylinder bored and just put everything back together oh and doctor i did as you suggested and slipped in a valves and checked for play with the guides and there was no play at all. thanks for the tip though. i believe what you were seeing was just a bunch of carbon buildup. also my valves were actually in pretty decent condition, however my piston was shot real bad and my rings were falling apart. im replacing valves, timing chain, and piston anyways just so i know what i got in there