WHEN TO USE WASHERS DURING AN ENGINE BUILD

That hole is the one beside the frost plug on the D/S. My numbers matching engine is on a stand, and was "gone over" by the previous owner. I knew that there was a hole like that, and you are right, it's pretty obvious. When I spun that bolt out of the numbers engine, yup, it was too long. Luckily, it was just long enough to scratch the cylinder....I almost puked when I realized the bolt was wrong. That bolt cannot go any deeper than .875. Any more, up to 1.1 inches, it's in the water jacket. At 1.1 inches it's touching it. I'm glad buddy put a .125 washer on the 1.25 inch bolt that he used.
Awesome! I'm glad you are familiar with that. It's been the demise of many a good build. It's repairable of course, but with a sleeve in #1.