Clutch not disengaging properly

[1973GMC_1500]

The second 6.2 I put in my '87 starting knocking and losing power last week. I decided enough was enough and pulled it out. I dropped in a 307 Chevy for now, I might build a 350 later this summer. I used the 307 flywheel, but 6.2 pressure plate and clutch disc (shouldn't matter though- they all use a 12" clutch with a 4 speed). My truck also has a hydraulic clutch, which works fine.

When I press the clutch it won't disengage enough to get it into (or out of) gear. If I shut it off put in gear then start it with clutch depressed, it won't move but it makes a really loud grinding sound which goes away as soon as the clutch is released.

I was wondering if something happened to the throwout bearing- I pulled the boot off the fork but I can't see inside the bellhousing.

Any ideas let me know. I think I'm going to have to pull the engine back out but before I do I want to make sure the water pump fixes my coolant leak (I suspected head gaskets at first)