update;
Tore down the top end and removed the head.
As I suspected the head gasket was blown between 4 and 5.
And I do mean blown.
http://s1276.photobucket.com/user/jsdesign2/library/Head was planed when the valves were done, block was checked for flatness, torque procedures normal - cold and cooled after hot.
Will check head and block again tomorrow.
