how much ####ing about? its probably cheaper to get another engine than buy a headgasket and bolt set.
To summerize, the cooling system is pressurising, low power and lowish compression. And after re-reading your post (its quite confusing) did you check the piston ring gap when it was in the cylinder?
Like that? as if it has knackered the piston rings, it could of damaged the bore too. another way to do it is feel or a lip at the top of the liner, it should be smooth from the top to the bottom, with no ridges in it.