Thanks a lot - makes sense. Also, thanks for the tips on how to decide whether or not to keep the frame. This is all helping me to plan out what I'll do. I'm also bringing the frame into an LBS today to have it looked at more closely - will post later to let people know what the outcome is
To add to that. You are missing two vital piece of the headset, the washer and the locknut. WIthout these the headset will just come loose (quite rapidly) as you ride the bike. So you need a fork that is about 7-10mm longer so you can install a locknut and washer. Any locknut and headset washer will do. The important thing is to make sure you keep the crown race if you sell that fork. The crown race is pressed on to the bottom of the stear tube, you'd need to take it to a shop and have them remove it or use a hammer and big flat screwdriver and be careful to go easy and switch front to back with each hit. You'll want a block of wood to rest the stear tube so you don't damage the fork for the floor.
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1 Super Record bike, 1 Nuovo Record bike, 1 Pista, 1 Road, 1 Cyclocross/Allrounder, 1 MTB, 1 Touring, 1 Fixed gear