[Vwdiesel] What? Head Gasket Okay!?

[William Longyard]

Please help me understand what happened:

I just bought an 81 caddy 1.6 na.  Driving it home 600 miles and after about 
300 suddenly I smell antifreeze, the car slows down gradually to 55 and I 
pull over.  Opening the hood I see the overflow tank bubbling like mad, and 
I THINK I see a bit of oil coming out from the back side of the head.  My 
assumption was blown head gasket.

I finally got the head off tonight and I can find NO crack or gap in the 
head gasket.  I did notice that only three of the head bolts were on super 
tight.  Another four were on very snug and three were easy to get off.

Looking down into the bores I found that number two cylinder has a slight 
rounded gouged area on the firewall side of it, and the bore itself is 
smeared with some aluminum.  The rest of the bore seems to have some white 
crystal substance sprinkled around it.

Please tell me what to do next, and what caused this!  I'm sure I'm into a 
new piston, and rings for No. 2, but what other damage may be done?

Thanks for any help.
Bill Longyard