oil in valve cover is full but dip stick shows 1 quart down

This is a sign of some serious engine sludge! A complete teardown of the engine will need to be done, and the block, oil pan, valve covers, oil passages, oil pickup screen, and other assorted areas cleaned of the sludge and buildup inside the engine block.

I've seen this many time before..... it is usually caused from lack of oil changes which cause sludge to plug the drains in the head.