F*&*^^^&K!!! Crank Case screws are stripped!!!

Hows everything look so far??

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Looks like that flywheel has done a fair amount of swimming in its time
 
Dualstroke I hammered a smaller socket on there and it worked like a charm

Awesome!!!! Saved you a few dollars on buying tools.Glad it worked out and you got it off.

Do I need to polish/grind or paint that white/rusty looking area on the flywheel?

That white stuff is just oxidization from getting some water or moisture in there. Doesn't look to major as it is just on the front face of the flywheel. I would just hit the flywheel with some steel wool and get the oxidization off. Make sure when you reinstall the gasket to not pinch it and make sure the grommets are in the cases before you reinstall it.