Does the engine have the water outlet/thermostat restrictor installed? It's a brass disc that is installed in the block below the thermostat. Clevelands need this to stay cool. It's easy to overlook.
^^^ Ditto. The 351C uses a Cleveland-specific thermostat and a metal disc that closes off the internal bypass when the thermostat opens. Without the disc in place coolant will recirculate back into the engine instead of going out to the radiator.