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Thankfully this isnt on my vehicle, but sadly its on my friends. The motor is a 305 and its been leaking coolant towards the back and as one of my friends was feeling around towards the back of the block, wiped some "sludge" away and coolant just poured right out. Is something like this repairable? What could have caused it?

well, i see your located in michigan, an im sure its been a balmy 18 degrees there in the day time right?  if he has to high percentage of water in his coolant, it may have frozen and the freeze plugs may not have ejected like they are supposed to.

Bryan, are you guys absolutely sure the block is cracked? Really, really sure? Theres always that possibility that the head gasket is leaking externally, and this could account for the sludge if it's been leaking for quite some time. Realizing that a 350 is a gm motor, but ford is having a huge problem with the right side head in the rear, and that they are leaking too, but it's a bit more involved than that with ford. I would degrease this thing real good, and go searching for the source of the leak, it might not be the block, especially if the proper mix was put in the car.  

Quote (JCZ26 @ Jan. 26 2003,18:03)Bryan, are you guys absolutely sure the block is cracked? Really, really sure? Theres always that possibility that the head gasket is leaking externally, and this could account for the sludge if it's been leaking for quite some time. Realizing that a 350 is a gm motor, but ford is having a huge problem with the right side head in the rear, and that they are leaking too, but it's a bit more involved than that with ford. I would degrease this thing real good, and go searching for the source of the leak, it might not be the block, especially if the proper mix was put in the car. ÂÂÂ
Ill tell him to check into that. He seemed pretty sure that the block was indeed cracked, but you never know with him. Would the engine still be running fine if it were a cracked block or leaking head gasket? He drove the truck to school today.

With a cracked block it could still run great.....UNTIL it gets low on fluid. It is possible if its the head gasket that it would still run OK.  As long as its only blown to the outside.  Easiest check for a blown head gasket is to A. Look for a milkshake mixture on the dipstik (youll know what I mean by milkshake if its there) and B. Compression test on the cylinders closest to the leak.  I have known CRACKED Chevy V-8's to be repaired, but it depends on where and had badly its cracked...BUT still Degrease it throughly and look again or take it to a REPUTABLE shop..  After He's cleaned it..