Well, you found out one of the big issues on the OH motors, especially the 16's for some reason...dropped valve seats, mainly exhaust. I bought my Sears 16 non running, I pretty much knew exactly what it was. Unfortunately, mine had destroyed the head beyond a major repair and elgongated seat in the head. If yours is just lose, I think Napa has some actualy valve seat adhesive speically designed for glueing them in place. Once you get it seated properly, you can also "peen" the edges of aluminum seat down around the steel seat to help keep it int there. I did that to mine when I replaced it. Most used heas go for around $100 on evilbay, if you catch one right they will include rockers, push rods, valves, etc, that's how I got mine.
Here is picture of how I peened the seat, well kind of. This is my old head I beat on some with a bunch of punches, you only need 4 or 8 evenly spaced "peenings" around seats with a small punch.
You can make yourself a nifty valve spring compressor out of a piece of angle too
Are the magnets all still stuck to the flywheel? Mine did the same thing, I made sure I kept original orientation, then cleaned both flywheel and magnets and then glued them back with thin layer of JB weld. If they came off, you can follow instructions on Ed's website to get them back in proper orientation.
Here is mine being clamped during drying.
Edited by TAHOE, May 16, 2013 - 09:55 AM.