A lot of the 194-230-250 engines have the same crack, I had one just like it. I have read that the head bolt at the front drivers corner needs only 85 ft lbs of torque where the others get 90 or 95. The little bit of cast iron left after boring the water pump hole along with heat cycles cracks them. I have read where installing the water pump helps when torquing the head. Mine seeped coolant to the outside, there shouldn't be any oil in that location. There are head bolts that go into the water passages, so maybe one of them is letting coolant up into the top of the head where it mixes with oil. I scrapped the block, no one wanted to try and fix it, plus blocks were fairly easy to get at the time.
