Undercut,
Same as these guys said, you take a chance when you buy used equipment. Bill's has an awesome reputation, but this is a consignment item.
Just as with any engine, if it had recent work that included head gasket work, and valve work, and I could not afford for it not to be running, I would have been leary myself - as these may be signs of something major about to happen....
I had something similar happen to me with my Jeep I recently bought. Next time I know to be leary of "recently rebuilt". After a few weeks of driving it I heard a "miss" in my engine, did a compression check, and have a cylendar with no compression on a supposedly just rebuilt engine, heh.... So I'll be tearing it down myself and rebuilding it, when I can afford to. Thank god it's not my ONLY car. Amazingly that "miss" wasn't apparent when I test drove it, I surely would have heard it. I'll know better next time, and I suppose you will too.
Just don't hold it against Bill's they have a good reputation for a reason. Years and years of good service to many people.
Sorry for your frustration
Jenn