STOP PANICING AND BE THE MAN YOUR FATHER WANTED YOU TO BE!
Seeing some "marks" means NOTHING! Could be simply from regular use. Wouldn't panic one second as long as you don't have a compression test done. And you have to do the compression test BEFORE ripping apart the saw in total panic! When I see how many of the "old" saws(contra, 041, etc.) I have that have virtually only a coarse mesh left in place of an airfilter and how well they are running, fine dust means nothing.
Personally I see the situation that this saw is essentially a normal home user volume use saw. I presume it probably hasen't been used in the last 5 and hardly in the last 10 years. Further since this will be more a "wall hanger" than a regular use saw I wouldn't do anything to the saw.
What would I do?
First off the compression test. Even if it was ok I would at least buy all the seals, as long as they are still available and at least give them a good shot of silicone oil before stashing them away, so that they don't dry out to much over time.
Further I would get a carb kit and all rubber(fuel/oil lines, etc.) new and either replace now or, after above sealing, sometime down the time road.
I would NOT buy a new topend as long as I am definately sure that it is really dead! That means that you have really deep gouges in the cylinder and that it is not only aluminum transfer which is easily remouvable(just do a search here and you will find dozens of "how to's"). Only then would I even think about replacing an original, which is about always better compared to a aftermarket.
And last if you want more power I would get a new saw. Even a Echo 590 should be in the same power range and will only set you back ~400$. And if you want something to play with get a husqvarna 365xp and grind out the transfers(=> essentially making it into a 372xp) and enjoy unlimited 70cc power.
Good luck!
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