The 201 or 226 engines are not known for head gasket problems. I doubt the head gasket is your problem. It is more likely an O ring on one of the sleeves, a hole in a sleeve or possibly a cracked head. 

If you are sure the head is not cracked, I assume you had it off. Did you use any sealant on the head gasket when reinstalling? Have you retorqued the head?

Firstly though, if it's plain water in the pan NOT coolant (and assuming the rad has coolant) then I'd be tempted to replace the oil & run it a while to see if it's not just rainwater from standing outside. 

I have (often) seen the outside where they looked fine, but the inside was badly corroded and they were leaking. 

Pressurizing the cooling system is quite easy and it will show where the leak is coming from. Right now, you are guessing where it MIGHT be coming from.

I don't mean to be rude, but it seems like you are asking for advice but planning to ignore it. There is a lot of experience on this forum. If you aren't going to listen to the advice we are giving, you are wasting our (and your) time.

In my opinion, that will be (by far) your best first step. It's pretty hard to fix something when you aren't sure what the problem is.

So,,,,,you've got 30 hours of running in 5 years?  You did NOTHING to this tractor since you bought it?  You didn't change the oil in those 5 years?

" It runs perfectly fine with the water oil mix."  You may have kissed your crank bearings goodbye doing this.

"put everything back together and add head gasket sealer to see what that does"  WHY and WHERE are you adding head gasket sealer?

Like the good Dr says,,,,,we NEED the full story.  From the time you got it and ALL that you did to it since.  Give us the COMPLETE story.

BUT,,,,,,,the help and info that you have been given so far is good.  The FIRST thing to do is to pressure test the system!!!

We ARE trying to help you....there are STEPS that you must take to find out what is wrong.  THEN you can go about fixing them.  It's NOT hard, but necessary.

We're pulling for you to get this going and working correctly.

Don't get frustrated, it'll all come together once we KNOW EVERYTHING and then we can help.

GOOD LUCK!!

here is what i have done so far

https://docs.google.com/document/d/1UFrPqZJGU3uhSaHj19A6XjEK9KKMHNtJbAfLofFBzV8/edit?tab=t.0" rel="nofollow - tractor - Google Docs

i also split the tractor and repaired the hand clutch

i also replaced the muffler

The issue is, right from the original post there's been unclarified confusion & omissions to the timeline of things.

Doc's not trying to poke at you (none of us are, we're all in this for the orange after all  ), but it's hard to help diagnose something from afar even when you DO have the full backstory in order.  I get not all of us are the greatest with wording stuff (hell I'm not!) so that others understand but I think it might help if we draw a line under all that's gone before & if you start from the beginning with a "bullet point" kind of list going from how long the tractor sat, how long it may have been uncovered, if the exhaust might have ever been open, then the process of getting it up & running (what fluids were empty/what fluids you changed/what you didn't/engine stuck or not and the like) and how we got to the point of the oil being full of antifreeze including any other work done in between getting it running and now.

One thing I will say is, if your grandpa drained the fluids before storage then it's possible he was running straight water & not antifreeze (he'd have drained it to save freezing the block) and on that basis it may well have rotted a freeze plug from the inside.  Whether we "go from the top" or not though, the logical next step I'd suggest remains the same in that we pressure test & verify where the leak is coming from.  Fingers crossed for you it's as simple as a freeze plug & not a crack in the block.

Really crossing my fingers for a rotten freeze plug here!

In that case I'd have to presume grandpa parked it because he was having the issue you've now uncovered, and perhaps he had even pressure tested it & determined the cause.

Either way I think from that, we're likely looking at a pre-existing fault.

Also from further reading, you've done a hell of a lot to this tractor & seems like you're learning as you go. Good stuff, keep after it!  you'll get it in the end.

Either way, reading this is getting me in trouble with the Mrs now so going to have to break off and help with cleaning up for a while! Good stuff so far though, keep at her!

hunter321 wrote: the easiest way to explain what has been done is to have you read the links i posted

So you want us to go back and read a 13 page thread? Plus the google docs?

The easiest way to get help is to be cooperative and just tell us the pertinent information. I do remember attempting to help you on some electrical issues, and as I recall it was just as difficult getting you to give good feedback then.

Best of luck to you on your project, you're gonna need it.

You might not want to pull the sleeve, but you might not have a choice if you want to save the engine. When you get the sleeve out, you will know immediately if it's a bad O ring. You can try stop leak, but leaking O rings on a sleeve are not that hard (or costly) to replace.

Before you do anymore, get yourself an Allis Chalmers service manual (not IT) and follow the directions. 

Ooooh dear... Not looking good for my B's block then!  I noticed small cracks between the liners on that a while back but had the same thought "it's only between the liner tops, won't hurt" (maybe more in hope than expectation).

Guess it's fair to presume a lot of these blocks got frozen over time, but I did kind of hope it stayed together down below.  I've got to pull the pan back off to address the damaged drain plug anyway but wish I'd known to check there before I put the tractor back together haha! Ah well, I suppose at least I didn't invest too much time or money in it yet!