Rust on the cylinder wall

[eightyninelx]

Hi. I hve an 89 4d lx 5 speed. Got it from a towing yard hoping to use as a daily driver. It ran but smoked so I took off the head and found oil in one of the cylinders. I put the head back on top of the block w/o putting bolts on. Did this more than 6 months ago. Yesterday, I checked the block and found a 1 inch wide band of rust near the top of one of the cylinders. Would that be a problem if I did a rebuild? Should I just look for another engine to swap? TIA.

[Honda-Master]

hone the cylinders walls and see if it cleans up properly,, if not , try a ridge reamer than hone the walls,,