I think the head bolt/stud in the front corner of the block is the one that should have sealant applied, to keep coolant in. Could the head have been pulled once before and this sealant omitted? The freeze plug fixes indicate someone has tore this engine down a least a lil bit.
I had a WTF moment first time noticed the factory dent in the downpipe. I thought it was an ECORS induced phenomenon, but then found it on my DD, and every XJ I looked at after that.