Bernie, that looks like remnants of the teeth from the timing gear(on the cam). Remember, the cam gear is(was- aluminuminum, with "plastic" teeth. This is what you see.
The inside if the engine looks clean, the lifters that are visible look to be undamaged. I think you're in good shape to simply replace the p-rods, and go. You might pull the lifters out of the holes on the ones that the p-rods are broken, and look at the bottoms. They should be nice and un-scarred, and flat. You will see some wear marks, but there should be no "cupping" where the lifter rides on the cam.
If I were in your shoes, I would replace the p-rods(all of them), clean out the pieces laying in the valley, and put her back together. my 2cAdams' Apple38837.3396180556

YupYupYup....I stand by my earlier post....go for it! I see no major issues there.

I'm with Joel on this one.  Get the push rods and put her back together.

Thanks for all the advise guys!  All great comments, I am learning allot and can't wait to hear her run again. I was glad to see how clean everything was in the valley and on the top of the heads. Although I did have a valve job done about 2 years ago, so I guess it should be fairly clean.

I will let you know how it comes and when she fires up. It was nice to be able to post the pictures so you could see what I was looking at.

Nice story Bernie ! Your in good hands over here with that lawers duo and all will be running soon or already yet ? You're lucky to find "broken" parts , as with my problem i never found a broken part so one keeps looking for that , at the end accusing everything . I even tought bad gas ( refilled the tank with other brand ! ) Electronic interference from bad AC/DC aternator ! , factory design fault from Arkus Duntov etc.

Better to find a mechanical BROKEN part !

How far are you ?