The cam and lifters are completely shot. The lobes are disintegrating and the lifter bottoms are no longer concave in shape. Time for a cam, lifter and timing chain swap. As for oil always use a high ZDDP content made for flat tappet camshafts. Lucas Hot Rod and Classic, Amsoil Z-Rod, Mobil 1 zinc, Pennzoil Racing, Rotella and Valvoline VR1 ZDDP are just some on the market at the moment. There are many others. There was a shop near me that had built a 455 Olds engine for a customer
and wiped out two sets of cam and lifters in a row. I suggested that he switch to Z-Rod which solved the problem for ever. Today's engine oils offer many options specially formulated for different applications. In searching for an oil for my wife's Fiat 1.4l multiAir Turbo, the only one I could find that met all of both Fiat's and Chrysler's specifications was Pennzoil 5w-40 European. It has special additives that not only make it an engine oil but provide the characteristics of a hydraulic oil to operate the high pressure requirements of the MultiAir Brick that operates the intake valves. I can show you the $3500. repair bill from the dealer that resulted from not using this oil. A parts guy at the dealership told me that this is the oil that they used as well.