Hole in #1 cylinder wall near bottom

What happened? Installing new power steering bracket and felt the bottom bolt get right before it was seated on the bracket. Didn’t torque it, so backed out and used washers to space it. Really strange since it was same bolt that came out of that hole. Putting antifreeze in after the bracket was done and could hear water going into the pan. Grrrr.
Maybe the bolt was sealing the hole originally?

My rule is to insert a chop stick screwdriver etc into the hole in question to determine the Longest bolt that can go in the hole. then with a piece of wire with a small L on the end insert it into the hole and then pull it back till you feel the back of the hole that gives me the minimum length bolt length