Water in #6 cylinder?

This is copied from my resto page. Any input is welcome. I am not a experienced engine builder, this was my second rebuild(first was a 4 cylinder Honda) which was fine when finished.
I spent the better part of the morning yesterday searching the FABO search forums on the subject and i'm thinking I am screwed.

From resto page.
OK. Dropped the 340 in after priming the oil system, had trouble getting the fuel pump/system to prime. Rerouted fuel line into can of gas and was able to keep running for the 20 min cam break-in. Kept house fan blowing through the radiator. Everything seemed ok, oil pressure stayed @50psi. I did notice some moisture comming from the exhaust at first but it stopped after a few minutes. Got up thursday morning to do some more work and noticed low water in the radiator. Tried to start engine and it wouldn't move. I freak out and just stare at it for a minute. Decide to pull the plugs and cylinder 6 is wet. I bump the starter and it shoots water across the garage.(at least it turned over) I think I am totally screwed! I will pull the top end apart today to see what I did or didn't do. Hoping it's a bad head gasket and not a cracked head or worse cracked block. :angry7:
No machine work was done as it ran when pulled. The cam was bad so I decided to replace all bearings and rings as well as cam and lifters.
This took the wind out of my sails for Thanksgiving.
One step forward three steps back.:angry7::angry7::angry7:
I will update later, hopefully with an idea of what happened.