Yeah cylinder 8 bore actually looks fine form those new pictures.
From the pictures it does not look like any of your liners have slipped either.
You might have a coolant leak past the hg into your cylinders but its kinda hard to tell that from pictures, the hg doesn't look good around the coolant passages though.
You definitely have ring wash though. So you might(leaning more towards probaly) have to replace piston rings.
A note on this though. When i first got my p38 i was burning oil, i suspected piston rings and after doing about 2 oil changes and about 10 000km the engine kinda stopped burning oil. The same thing happened with another p38 my brother bought. So we suspect if the engines stand for long, oil changes neglected and dont get driven often the oil in the rings gets gummed up and the rings aren't able to move freely causing them to leak. So it seems after a few oil changes with some high quality oil it seems to fix itself.
But when i did my HG on my car though which was after it had stopped burning oil i did not see any ring wash on my pistons.
So in your case it might go away it might not, thats a gamble you will have to take if you are willing.
Clean off the block and heads really well. Some scotch bright and q20 works quite well, a plastic scraper works well for the tougher spots, a carpet knife for even tougher spots but be very careful not to stracth anything with this. Even with the plastic scraper id be careful to not scratch the aluminium. Put the piston about halway down the bore where you are working with a rag in the bottom and then remove the rag to get most of the dirt out and then while vacuuming out the bore slowly move the piston down to get all the dirt.
Also make sure you clean out the threads for the headbolts in the block. If you take a old headbolt and cut a slot along its threads length wise it makes for a semi decent thread chaser.
Id get myself a straight edge and check the flatness of the block and heads after a thourough cleaning. Just to see if its necessary to send off to a machine shop. Its quite easy to do.
If you not sending anything to a machine shop id also strip the heads down and clean all the carbon off the valves and valve seats, then reassemble them and check for leaking valves, position the heads upside down fill the area above the valves with water(i cant seem to think of the name for it now) then blow some compressed air in through the port and see if you get any bubbles past the valves. If they are leaking youll just have to lap them. While doing this it wont hurt to replace the valve stem seals, they quite cheap and easy to replace. For cleaning valves, put the valve in a drill and some scotch brite and q20 works very well.
I would aslo highly recommend arp headstuds.
