I'm part way into checking the valve lash of my SBC which is a job I've never done before. I bought the engine second hand & I don't know its history or condition. Actually, I'm at the beginning. I have #1 cylinder at firing position & I noticed that both the inlet & exhaust pushrods are easy to rotate. From what I understand, they should be tight & I have to back off the adjusting nut till they are loose then turn down the nut after the pushrod is just tight. So am I right to say #1 valve as it is is out of adjustment? What would this mean when the engine is running? The engine does have a rattle a bit like pinging only when cruising at 100kph as far as I can hear. I'm hoping the lash adjustment will get rid of this.

If #1 is at TDC on the firing stroke, the pushrods shouldn't be tight at all - you should be able to rotate them with finger pressure, as the lifter is on the base circle of the cam (making the valvetrain for that cylinder "inactive" at that point of the cycle).

If you tighten them up when they're inactive, then as the motor heats up, the pushrods expand slightly, and can then hold the valve open at TDC, resulting in a bent pushrod, or a burnt valve.

As Byron noted, you will need to know if you have hydraulic lifters or solids, as they require different processes & clearances.
Hydraulics require some preload at rest, but even with that preload, you can still spin the pushrods with your fingers. Solids require a slight clearance at rest.

If it's a hydraulic cam and lifters, get it to firing position for 1, with the timing mark lined up, and back the rocker nut off for inlet and exhaust on 1 until you feel the slightest up down movement in the pushrod. Rotate the pushrod between thumb and forefinger, and slowly tighten the rocker nut until you feel some resistance. This is the point where the pushrod contacts the lifter plunger at the top of its travel. From there, tighten the nut one turn, which should compress the lifter plunger to around the centre of its travel. You can still rotate the pushrod between thumb and forefinger at this point, but with more resistance. You can do inlet and exhaust for 1 with the crank in this position.
While you're at it, do the inlets for 2,5 and 7, and the exhausts for 3,4 and 8 as they are also on the back of the cam lobes.
Then rotate the crank one turn, until the timing mark lines up, and do inlets for 3,4,6 and 8, and exhausts for 2,5,6 and 7.

The conservative part of me says to pull the pushrods out one by one as you do this, and see if they are straight.

Edited by user Saturday, 23 July 2016 10:33:23 AM(UTC)  | Reason: Not specified

Depending on how keen you are, you might want to check the pushrods are all the same length, that they aren't beginning to punch their way through the pressed steel rockers, and that there aren't any rocker studs lifting out of the head. Some sideways rocker movement is normal though.

The inside of the rocker cover on the driver's side bank has some heavy scrape marks. They're on the lower side of the cover. Does this mean the valve cap or rocker is scraping on the rocker cover? What should I do about this?

I agree with Dr Terry. I had a HT 307 in an FJ40 years ago and the same thing happened - it is hard to know to the inexperienced which way they go as the oil filler is at the front through the inlet manifold and the rockers look very similar. Same thing happened again on a 302 SBC in an MQ Patrol ute years later - that one was my fault!