A friend of mine had the misfortune of being in Mississippi when
hurricane Katrina hit.  He was not in the direct path of the storm, so
he is fine, but his antique late 1960's Chevy car was flooded, and was
submerged for several days.  He just had the car towed, and said it's
a huge mess.  However, he wants to rebuild it.  There is no external
damage except a small dent and a few scratches probably from floating
wood and stuff. So, he has a good frame, good body, all the windows
are ok, tires ok, etc.  But the interior is a big mess and as he put
it, it's the engine and transmission that he is worried about.  He
already drained the oil, and lots of water came out too.  Same with
the transmission.  He also dumped the master cylinder and bled out the
brakes, which he said seem to work fine.  He also dumped the power
steering pump and gas tank and is stripping out the interior so
everything can dry.

Aside from tearing the whole engine down, same with transmission, and
ripping out the interior, what else should he be concerned with?  I
know he plant to scrap the stereo and said he will probably have to
replace some switches and stuff like the ignition.  But what else?
Could water get into the rear end?  

He said he thinks the starter and alternator should be ok once they
are very dry.

What else should be check?

Personally, I wonder if he really needs to tear down the engine.  I
think I'd pull the plugs, spin the engine a few times, let it dry
well, rebuild the carb, replace the coil and distributor parts, refill
with oil and start it.  Then replace the oil again.  But maybe I am
missing something....

PS. He plans to do a custom job to the interior with new seats and
carpeting.