I replaced a 454 Mercury yacht engine in Bremerton, Wa once and had to go back the next week because of customer complaints. He had decided that he didn't need any stinking break-in. So he took the boat out for a spin- had to be towed back, with a smoking engine. The cam lobes were almost perfectly round! Best I recall it was quite costly.

 

Any cam I install that has over .500 valve lift I use the recommended springs for that cam, cost a little more but I don't end up with wiped cams, bent push rod or broken rockers because the springs where wrong for the cam.
Your heads came with double spring but you don't know what their lift capability is before they coil bind nor do you know what the pressure rating is for those springs.
A friend bough a set of heads with springs that where supposed to handle his roller cams lift, after several months of bent push rods, broken rockers, broken rocker stands, broken roller lifter, I finally convinced him to check the springs for coil binding.
The spring where coil binding right at full valve lift, he ordered the correct springs for the cam and never had another issue.

You never said weather you did a proper cam break in or not, on flat tappet cams proper lube and break in procedures are very important.
Once the engine starts it must be raved to min 2000 rpm and held there for 20-30 minutes, if there's any issues the engine should be shut down, the issue fixed, then restart the engine and rev it back up for the remaining duration.
It should never be allowed to idle any time during the cam break in phase.

 

 

 

 

what was bore size ? almost looks like piston is to small . standard piston(4.05) in a 4.08 bore

 

4.08 pistons for 4.08 bore, they’re forged hence why they might seem small

 

I know you are making a list of everything that needs to be triple checked and verified so you can keep up with it.
including a list of measurements; listing all your clearances, bore size checks, etc etc. There must be some kind of way to measure the travel and resistance of springs etc.
Also when you piece together different engine parts it might throw off standard clearance listings and even when we know what to do we still have to make sure we do them.
I personally, would not trust myself to put a short block together, too many variables, clearances and measurements some of which require specialized tools.
When an engine rebuild goes sour someone, either the builder or a shop professional needs to find out exactly what problem(s) caused the issue so that it doesn't happen again.

 

I was meaning by the scraps it looked like piston was flopping around in cylinder .
I would check the rings closely

 

 

Bearing and cylinder wall scratching is consistent with medal particles from a failed cam lobe and lifter.
Had this happen on a performance engine tears ago, wiped a cam lobe along with about 1/8 inch off the bottom of one lifter.
Medal particles embedded into the piston skirts scratching the cylinder walls, one cylinder bad enough to require a sleeve to repair it.
Other particles where picked up by the oil pump and circulated through the system damaging the oil pump, bearings and in my case destroying the crankshaft.
I'd pull the oil pump apart and check it.

 

 

Run a light hone through the cylinders and see if most of the scratches will clean up, if any of them are real deep your looking at replacing the block or sleeving the cylinder or cylinders.
Have them polish the crank in see if it will clean up without needing turned.
Make sure there's no metal particles embedded in the piston skirts, if so see if you can dig it out, if you can get the pistons cleaned up I'd reuse them.
The pistons,rods and timing chain was I i could salvage from the bottom end of that performance engine back then, the block needed a couple of sleeves but I was able to sell that Boss 302 block for enough to do all of the machine work on a standard block and crank.
All of the oil galley plugs will need to be removed and the block flushed and cleaned real good.

 

Sounds like some great advice coming in !!

 

OP, don't get discouraged, **** happens.

Sounds like the root cause has been found (valve springs), and once things are inspected/repaired the motor should not have the same issue again. At least you didn't just ignore and drive it till it failed completely.

I built an injected 347 stroker and had a pile of time and money in it. It squealed at certain rpm/load after break-in. Figured it was a bearing, its a horrible feeling, I can relate. Turned out to be turbulence in IAB valve, but took a long time to diagnose.

Good luck with it.