Eric, I would definately clean out this groove that seems to be causing your
problem.  You might try scraping it out with a screw driver (sometimes they
get deposits on them that can be scraped off) or you may want to remove the
cylinder and have a machine shop repair the groove.  You can put the cylinder
back on later with a large hose clamp as a ring compressor (done it several
times with no problems).  I have spent alot of time on these grooves in the
past on customers engines that were overheated, etc as they seem to get
deposits in them that can cause the o-rings not to seat.  I always put a
little oil on the o-ring as well, just to allow it to slide on smooth with no
binding.  I haven't had a head gasket repair fail yet.  Hope this helps you.

Thanks,
Ken Wilford
http://www.vanagain.com
John 3:16
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