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It was common back in the day to heli-coil an aluminum block to avoid problems like this. I was told by an old sprint car racer, he's 70 now, that they would do it to NEW blocks! Scares me but I don't doubt him.
Also, sometimes damage like this comes from guys using impact to remove bolts from heads, mains and rocker studs and the like. They are much to tight and will frequently bring the threads out with the bolt. ALWAYS loosen the bolts by hand first!
HTH
BTW: I know this thread started a long time ago but it seems to have takena new life.
I appreciate (and can understand) the questions and comments on my competency. This is certainly not my first or even fifth head swap on a C5. Considering the consequences of block damage, I have always been very careful to clean the head bolt holes in the block. My procedure is to blow out coolant and/or debris, then I insert a paper towel into a straw (Route 44 drink from Sonic) and run it down into the hole several times to clean any remaining moisture. The third step is to thread down an old head bolt with a slot that will pick up any remaining debris. I follow up with a light to make sure the hole is clean and dry. I've never had a problem on the other C5 head swaps. This block had the threads let go on both the passenger side and the driver's side from the same front hole (with the mid-length bolt). On the passenger side I never even attempted to torque it to the first stage of 22 ft*lbs. I was just using my clean-up bolt and it came out with one thread from the block. One comment I read is that overheating can sometimes cause thread failure in an aluminum block. I don't know what the root cause is, but I can say with confidence that it wasn't from anything I did. At any rate, I'm stuck with this car in my garage until I can get my hands on the Time Sert repair kit. Then I have the liability of trying to repair his block. I may retire from working on other people's cars after this job.
By the way, here is a picture of the Time Sert kit:
edit - just found a local C5 owner who has this Time Sert kit. I have ordered some replacement inserts, so by the end of this week I should be set to make the repair. That will save the car owner several hundred $ versus buying a new kit.