Water in oil after rebuild - looking for guidance
Thinking out loud here. The crack goes from the water jacket to the bolt hole. Not the cylinder. At least from the picture.
How is coolant getting into the crankcase or cylinder? It would have to travel from a poor head gasket seal.
Looking at the gasket, are there signs of this leakage into the cylinder?
The head bolt hole should be a blind tapped hole so that can’t be the route to the crankcase.
I’m just wondering it some high tack spray sealant using a Felpro gasket would do the trick. I don’t know if you would create more of a problem grinding a groove and using JB Weld unless you are really skilled enough to file it flat.
At this point what do you have to lose except time and gaskets?
Chase the threads, retorque the head bolts and see what happens. You might just get lucky.
From the look of things the water had to mix because of that bolt not sealing the surrounding area. And or the cylinders in the area. A compression check would have confirmed that if you did one.