Surface rust on engine? No, no ideas, I'll just say that people paint engines with engine paint every day with good results if they follow the rattle can label directions. For the head mounting surface you can remove the studs and clean it with a "Scotchbrite" but ask a machine shop guy about the surface flatness. You might need to use or make a flat sanding block. For an idea see https://www.youtube.com/watch?v=oGZt6jCoIOA but don't do it the way he does, looks sloppy to me. I Am thinking a machinist would use something dead flat and larger than the block surface, like a piece of (scrap) granite from a countertop maker, hot glue or dopp wax or epoxy handles to one side and would glue the emerycloth to the other. Somewhere between 80 and 200 grit would be my guess BUT don't go by me, ask a machinist. You will have a problem getting the grit out of the cylinder wells.