That image doesnt look like a breach--more like some oil that was around that hole got drawn between the gasket and the head as it came off....

How is the thermostat/radiator. I think I would have replaced the thermostat first and checked the fan-belt/water-pump and for airlocks before tearing into the motor...

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http://i190.photobucket.com/albums/z...0TDnoplate.jpg

Alastair AKA H.C.II South Wales, U.K. based member

W123, 1985 300TD Wagon, 256K,
-Most recent M.B. purchase, Cost-a-plenty, Gulps BioDiesel extravagantly, and I love it like an old dog.

W114, 1975 280E Custard Yellow,
-Great above decks needs chassis welding--Really will do it this year....