man...i'd be ****ed if i were you!!!!
i got my motor and it was in PERFECT condition when i opened the box.
mine was made in jan, 2009 so it had been sitting for a few months before i got it.
NOTHING on my motor has rust on it, and all of the screws are like new. my frined bought a motor too, and his was the same way out of the box....perfect. (we both bought ours from boygofast and they are excellent)
the stripped screws sounds like maybe you got a motor that someone returned because they couldn't get those screws out for some reason reason. (because THEY were using the wrong tool). maybe that motor has already been ran, and someone was having clutch issues so they tried to take the cover off to check the clutch? i'd be leary on what the inside of that motor looks like, especially with the head stud problem. sounds like someone else tried to re-torque the studs BEFORE you got the motor and they over torqued them. the studs, bolts and screws in these motors are low grade, and they strip and break really easy.
a helicoil is probably the easiest and least expensive fix (but if you don't have a helicoil kit to install them, it can get a little pricey).
your other option as someone else suggested is to drill the hole out, re-tap it and go with 1 size bigger stud. (more work than what it sounds like) but you'd also have to drill out the one hole in the head so the head will slide over the stud. the hole in the cylinder will have to be drilled out perfectly straight and only that can be done by pulling the motor apart to the bare block, and having someone will a drill press do it (that knows what they're doing) or have a machine shop do it for you. OR, you could use a hand drill and go one drill bit size at a time, trying to follow the original hole as the drill bit goes in. This can be done too, but it wil be very time consuming. if the hole isn't drilled perfectly straight, the stud will end up being crooked, and it won't line up with the hole in the head.
man, i wouldn't even attempt to fix it, i would demand a new motor from them, and don't send that one back until you get a new one. but, from what their customer service suggested, sounds like they probably won't send you another one.