Heres some pics

Per phone conversation lap all the copper washers with water and 400 grit sand paper, clean orings grease and reinstall, make sure everything is real clean, before you reassemble roll the piston to TDC (Top Dead Center) and snap a few detail pics of the piston crown.

This have low compression? Signs of dirt on the cylinder wall.

The cap on the nut most likly split from bottoming out. This usally happens on milled heads causing bad torgues and BHG ( blown head gasket). Using copper washer sometimes require retourqing, they soften up when hot. Make sure you are using thick enough washers and tigen up in sets of three to final torgue using copper heat cycle and then retorgue. As a side note mark head nuts and mark across to head with marker prior to retourgue and see how far they move when retougued. You may go UM. Just a thought.

Oh ya ask your self what that little circle is on top of head stud and then look in side of head nut. It happens to us all so don't feel bad.

Oh yeah we know the cause, that is common, I doubt it affects torque that much since you can practically take a screwdriver and push them caps off the nut, they are just a dust cap that is soldered or lightly spot welded on, I totally forgot this was the O ring head or I would have just had him sand the one washer and reinstall it... The O rings are reusable so it wont kill him to remove and reinstall the head, its about due for the annual anti freeze change anyways.

With the O ring head you have coolant around the studs and it can migrate up to the copper washer, so if the copper washer is not 100% or has a speck of dirt on its sealing surfaces it can leak, those washers have been reused at least 6 times since I bought the head new, their probably due for a light sanding to ensure they are nice and flat, if they leak again in the future I would say heat them up and anneal them.

I usually shorten the head studs when I cut the heads, that head uses no gasket so the clearance must still be close.