Allis Chalmers WD45 Diesel project

Did you confirm that your sleeves were not sunk in the block?? Did you have the head pressure checked while it was off?? Crack the oil drain plug, does any antifreeze com out?? Need to narrow down what the problem is, not keep throwing money and time at it...  I believe overheating can be caused by compression leaking into the coolant, foaming antifreeze is also a sign.

A customer of mine has a wd45 diesel with BD230 engine. The BD230 evolved into the D262 that is in the D17d and D19d tractors. So very similar engines. Last spring he called me and said the tractor is overheating and temp gauge moves up and down rapidly. He took thermostat out, still same thing. 3 months later, he was using it and it blew antifreeze out radiator and out all hose connections. <- This is what happens when compression pressure gets into the coolant. He is now having the engine rebuilt. When I tore down the block a few weeks ago, 2, 4 and 5 sleeves were noticably sunk in the block, causing the head gasket to fail. Block top deck webs are cracked between 1-2, 2-3, 4-5, 5-6 and cracks through head bolt holes. Cylinder head is also cracked like yours, from injector tip bore to bottom and from pre-combustion chamber bore to bottom. I am not messing around. The head will be pressure checked and rebuilt. My block is a lot worse than expected for being a running engine 6 months ago, and will have to be welded and machined and decked. Hopefully yours doesn't need that much work.