Thanks to all who posted on this thread.
My friend has decided to have the current FL 120 engines remanufactured by Harbor Marine, Everett, WA.
Reasons include, low compression on three cyls, the oil leaks, need to rebuild one transmission (not a Velvet Drive) possible leaking head gasket.
Benefits, One yard does the removal and re-installation, and the re-manufacture with all new accessories (water pump /circ pump, hoses, fuel pump, heat exchangers, etc.) A warranty on the engines. Not betting the R & R labor $$ by doing a partial repair. Getting the job done and being able to use the boat next summer. Having like new engines and control of subsequent use. (Who knows what the POs did with the engines)
Drawback, Costs-a-lot.
FYI: A remanufactured FL 120 now costs $17,000 at Harbor Marine. The price has gone up a lot in the last few years.
Again, thanks to all who posted.