Good chance the head is warped in that area. Take it to a good automotive machine shop and have them check it out. It doesn't have to be much for the gasket to fail. Hopefully it is the head and not the block.
I had one on a Japanese Massey. Had two machine shops say it was fine by running a parallel bar across it. Finally after trying everything else I went back and said do a skim cut on the head. They argued I didn't need it. I said it's my $75.00, do it. Got a very sheepish phone call a couple days later, "you were right" and it was in the area between the cylinders. Not much, probably less than the .005" that was allowable. Problem fixed. Doesn't take much on a diesel with that high compression ratio.
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Today's Featured Article - Gatherin of the Orange - by Rick Nikolich. In July of 1998 I was talking to fellow Allis Chalmers collector Mike Schilling about the annual "Gathering of The Orange" AC show coming up in August of 1999. He got this wild idea that we should get a convoy of AC tractors and drive them from Charlotte, Michigan 105 miles to LaGrange, Indiana.
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