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I started my engine building career in 1965 when I was in high school. I tore my '59 Chevy's 283" apart and noticed all of its head bolt's shanks were rusty and didn't show any signs of their ever having a thread sealer on them. The MOTORS MANUAL I referred to just said "coat their threads with engine oil before assembly". Rather than using oil on their threads I decided to use Permatex Form-A-Gasket on their threads as I knew it would act as a lubricant AND prevent rust from forming on them.

I began working in an automotive machine shop the next year and every small block I ever encountered also had rusty head bolts because the factories didn't use thread sealers. Just oil. The head bolts in engines that had been properly maintained with a 50/50 mix of antifreeze didn't show any signs of rust whereas those that were run without antifreeze showed severe rusting; so severe most had to be replaced as they had very deep rust pitting.

Cast iron blocks will rust but then the rust acts as a barrier to more rust but STEEL head bolts will continue rusting. That's why antifreeze must be used except for track racing events where it is prohibited because it's slick and doesn't evaporate.

Now days thread sealers are recommended and there are many to choose from. As it worked great I'm still using Permatex Form-A-Gasket on all of my engine builds.
 
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