Man I'm having de ja vu through your build. I also have an '86 K5 (my dad's the original owner) and I had bought an engine for it years ago before the days of crate motors, which took me a while to install (life got in the way). It was a four bolt, pre-80's motor but I also had to maintain smog for registration purposes, but most of the stuff bolted back on. The orginal motor and trans had 225k miles on it and actually ran well (but tired). Sure enough, 2k miles after I installed the motor, the trans went out - well, not really but one day it made a hi pitched noise that went away but the pump continued to have a slight whine afterwards (but shifted normally and started leaking badly). It was dumb of me to keep pushing it so it only took a few hours to drop the tranny - the hardest part is balancing the transfer case & tranny on a lift if you're pulling it as 1 unit. Since your motor's out, I would def consider dropping trans now because it wont last too long behind a fresh engine (especially if it's stock or has never been rebuilt).