Every failure I see on your picture looks to be right where the head gasket crosses over from block to the flange of the sleeve. This would indicate that the sleeve flange is protruding too far over the top of the block. Book says something like .004 max but I personally always felt that was too much. I have seen an engine with new sleeves this summer that were .008 above block and it leaked immediately. A friend of mine was working on it and He had a couple of choices. Machine block with sleeves installed for flush sleeve, cut counter bore for sleeve or machine the flange of the sleeve down. He did not want to pull the sleeves out so he had the block machined down. This method IH always uses of the head gasket crossing off and back onto the sleeve flange is in my book not one of their better ideas. Always questioned it but normally works ok if protrusion is slight.
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