So I bought a 1986 NA 2.5L from a junkyard. The compression was good in all four holes and the water pump looked recent. The rear balance shaft seals were bad, so I replaced the front/rear seals and oil pump seal. I have an 87 oil pan so I decided to put that on. I drain the oil and found about a pint of water. I didnt see this engine run, but when I picked it up I didnt see water in the oil or on the dipstick. I have had this on the engine stand for a couple of weeks and had it turned on one side then the other. My question is could this water get in any other way than a bad head gasket?

 

No, shouldn't be water in there. I would pull the head gasket and replace that since you have it on a stand anyway.

 

There is also the oil cooler that may have caused the leak. Since you got the engine out, replace those seals also and prevent a bigger headache down the road. A few dollars to save hours of work.