Re: water in exhaust, oil and cylinders
First off, how are you magnafluxing aluminum heads? Aluminum is not ferromagnetic so you're never going to see a crack via magnafluxing. You'll need to use another form of dye-penetrant NDE.
The loose bolt could have been your problem on the second go around, but in general the gaskets are pretty forgiving.
Few things to look at. Check the heads/block for flatness. Make sure that you're getting left/right head gaskets and getting them oriented correctly. Make sure that you've got the crank in the 'safe' position when bolting the heads down. Check the intake VERY closely. The phenolic intakes have been known to crack (there is a recall for this). Lastly, use proper procedures for burping the coolant system when you put it back together to ensure that you're not overheating it on initial start-up.
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Jeff Chambers
1990 Mustang GT 10.032 Seconds / 137.5 MPH
14-time Street Warrior World Record Setter
CRT Performance
2001 Tropic Green Mustang GT - 12.181 / 113.2 MPH
2002 Ford F-250 Crew Cab 7.3l Power Stroke - 17.41@77.2
"There's nothing boring about a small block automatic shifting gears at 9400 rpm!"
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