Tims89LXvert's 1-10 items are spot on, although I disagree that you have limitations with the SD set-up, there are custom chips that will pretty much make it run like a MAF car.
Also remember you have flat top pistons on an 86, with truck heads (E6TE's) v.s. the 87-up (E7TE's), that right there would be a good swap and super cheap, I've got many E7's out of the bone yard for $150. That would give you 2 tenth's right there.
Also if you go ANY valvetrain work, like rockers, please replace those valve springs with a kit from crane or FMS.
Go with 1.6 rockers, so if you get aftermarket heads, you don't have any thing to worry about. 1.7's would increase lift a full .30. with the stock cam being .444, you would be at .474 which is fine, but I still recommend the 1.6's, I had 1.6 on the intake side and 1.7's on the exhaust, but I really couldn't tell you if it helped.
3.73 gears are the one's for you, DO NOT GET 3.55's, now i know I'm gonna get slammmed for saying that but, 3.55's kill MPH and are the worst grag racing ratio for 5.0 there is. I'll explain if i get slammed, LOL.
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