Now that im back to thinking rationally, I'm going to get a second opinion as suggested. If it does turn out to be the blown gasket then I'm going to try to sell it and cut my losses. The guy that was going to fix the gasket told me as much as he would hate to lose the work, if it were him, he'd just sell it. Said I could put it in the autotrader and be honest about whats been done to it recently ie rebuilt transmission, new rack and pinion, new exhaust system, BUT blown gasket and evidently there are some who would just jump all over it.

We'll see. I'll keep you guys updated.