Hey,
I feel your pain. The EXACT same thing happened to me in the EXACT same hole. I was replacing my cover and while re-attaching the subject bolt, it felt like I stripped it. I took the cover back off and noticed that the block cracked on the "ear" of the bolt hole. I very carefully removed the chipped piece while it was still hanging on before it fell into the pan. I decided to put everything back together the way it was and hope for the best. When putting the front cover back on, you will notice that it's a real pain the *** to keep the front cover/oil pan seal in place. The trick is to drop the pan a little bit. Don't try to work it around too much because your RTV will get too tacky and then won't keep oil from leaking out (happened to me). Instead of welding and tapping the block, I RTV'd the water pump back onto the cover like normal, but used JB weld as a gasket around the subject coolant passage. It's held up for two years now (30K miles). I can't believe it. My car is stock but I still get on it a lot and I haven't had any problems yet.
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