I think the person who built it ran the nuts on and off more than once. These should be the typical bunched thread type lock nut that normally work fine, but if used over and over can loosen up their locking ability. Then, if it was loose and backed off and the fit between the pushrod and the rocker increased then the additional impact force could possibly split the nut.

I'd put the motor at TDC, check all the valve clearances and instead of these 'locking' nuts, swap to poly-locks. Done right, they never back off. I've used them for 20yrs on my racing engines and never have trouble. One thing to make sure of is that the top of the stud is nice and flat, or slightly dished, but not formed a some weird angle from the thread forming process. If so, then a quick touch with a dremel/grinder will fix it up.

 

Thanks for the info guys. I ordered a complete new set of nuts and I am gonna re-do them all with new ones. better safe than sorry.

 

Just an update,
putting it all back together and got it out for the first time yesterday evening she's running like a top. I am happy.

 

Good, glad it up and running again.