Zachary Hoyt was spot on. Undercarriage can be a much bigger money pit compared to the engine. You may be lucky and it is only the motor which has been abused.
Antifreeze going past a hot valve is likely the cause of the corrosion. And the cracked manifold is also a likely pointer to 'cold' water sprayed on a very hot area.
Are the valve guides fitted through the cooling system on that head? Seems as though that could be a leak, especially when the radiator was pressurised. It should have been pushing water out of the radiator if the head gasket was leaking and possible hydraulic lock if the leak was a big one. Shame you didn't check out a bit more before pulling the engine apart.
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Today's Featured Article - History of the Nuffield Tractor - by Anthony West. The Nuffield tractor story started in early 1945. The British government still reeling from the effects of the war on the economy, approached the Nuffield organization to see if they would design and build an "ALL NEW" British built wheeled tractor, suitable for both British and world farming.
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