I started it for the first time that day and noticed a slight upper engine knock that went away after I revved it a bit. 127k on it. Is this common or something serious. I had a 5.7 w/174k and it never knocked at all!

 

I am working from memory here on Chevrolet Service Bulletins, but I think the condition is harmless in GM's opinion. If it warms up and goes away you are good to go.

 

Whats your oil pressure like?

 

according to the pressure gauge on the dash, I have approx. 60 lbs while driving on the highway. I did notice some smoke on a start up after it sat for a few hours. Could it need new valve seals?

 

I would check your compression before you go tearing your top end apart!!! Do a compression check and write down the numbers and let us know!