Honda GX-390 Rebuild

#1
I was bored and decided to see what condition my GX-390 power washer engine was in.It is about 10 years old and has been sitting outside uncovered the whole time.I looked in the gas tank and it had a lot of surface rust.I then realized it was going to take more than gas and cleaning the carb to get going.
Not having any engine experience other than cleaning a few carbs and getting an old snow blower running I decide to give it a go.
I take the tank off and spray some PB Blaster in it.I then take almost everything off inspect.When taking everything off i put back in all the bolts and take many pictures so i can remember how it goes back.I'm good at taking things apart but putting them back together is another story.I noticed that the carb and cylinder is full of rust build up.It seems like an easy cleaning and i might be able to get this thing running again.
I'm not sure of a few things and have a few questions.This will prob take some time i'm in no rush and don't know what the engine is going into yet.
1)Can the rust in the cylinder just be sanded down gently?
2)Should i get some type of gasket rebuild kit?(all gaskets look nice).
3)I have no clue what that little black plastic piece is.It came from inside the engine.I thought it was part of the low oil thing inside the engine but it wasnt.
4)do you thing a simple cleaning will do or should i buy a whole engine re build kit?

The engine was running like a top before and seemed to have compression when i took it apart.

Thanks for the help guys.

Rob
Will post picts soon Image Shack is running slow
 
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