I read the post from Gene in Dec of 2020 with the same issue and started checking my engine. The engine was bored .030 for pistons , the deck was machined .005 and the cylinder head was machined .020 due to running hot before I got the car. We installed new valves Intake and Exhaust and guides on all cylinders and ground the seats the crankshaft did not need turned just polished . Here is a list of everything I have checked or tried . Water temp has run between 190 to 200 its a mechanical gauge also a new radiator core was installed with a new water pump I also checked the engine temp with a temp gun in several locations each time it was ran. I never saw smoke out the tail pipe their was some smoke / blowby from the breather tube from the valve cover under the car and oil fill but cleared up after a few short drives about 1.5 miles each time. I decided to check the water level when it was cold from the flange in the radiator where the cap seals to the water just above the core then drive it and check again the next Morning before starting it . The next day it was down about 1/4 of a inch so I filled it to the same level not to worried at this time . Then drove it again and did the same this time it was down about 1/2 inch now I getting worried . I started to do some checking compression check all cylinders 120 PSI cold then checked hot all cylinders 110 to 115 PSI. The next Morning drained the oil slowly and water came out first put in it a separate clean pan then the oil. Checked the water it was down about the same amount. "I forgot to say after two of the runs I retorqued the head ( hot ) the first time they moved about a quarter of a turn to half the next time very little. " Then I pressurized the radiator over night to 7/8 PSI and it held no loss then I did it hot it also held overnight. Now Im thinking it must only lose water when its running. Now I went to see my engine guy who did all the machine work he wanted me to try a block sealer called Irontite that he has used in other engines with success. Not wanting to run it any more but did to work in the sealer fingers crossed then drained it hot and letting it set for 12 hrs I did 24 then refill with water. Sad news but still losing water. Last check was a cylinder pressure test each piston at BDC and TDC with 100 PSI of air and listen out the oil pan drain plug no air coming out. Then put air in each cylinder and closed air supply valve leak down was about the same. Now not knowing what else to do pulled engine out and apart " the block sealant leaves a white film " was hoping to see something and found noething . Took the block and head back to my engine shop we magnaflux everything we could get to head , cylinder bores valve and seat areas and found noething . Then put the head and water pump back on sealed it up and put 30 PSI of air to it and sprayed it with soapy water could not find a leak any where when we rotated it and looked. "The inside of the intake manifold is wet all 4 locations and spark plugs are to clean water leaking from seat ??" " Please forgive me for this giant run on paragraph Im at a loss and so is my machine shop guy ". I need you Packard guys that know these engines for you help because I don,t. know them .Hope I have missed something easy at a loss of what else to check or look at.
Wow, it would seem that you have certainly covered all your bases when rebuilding your engine, and also in all your testing to discover the source of the problem.
That your pressure tests are good is perplexing, I would have thought one of those would have failed. And that magnafluxing didn't show anything is perplexing as well. I know I'm not telling you anything new!
I would seem that there is a crack that opens when the engine is hot, and that maybe the combination of that, and the cooling system being under pressure it's able to push coolant into the oil, but where is this occurring????
Could this be occurring at the valve guides? Are they in the water jacket?
Hopefully someone has some better ideas for you. I'll be curious to know what the fix is and hoping that you don't have to look for a different block.
Slatewood The good news is perhaps there may not be anything wrong with the engine. Unless you have installed a coolant recovery tank every time you top-off the coolant level you reset a process where the liquid will seek the same volume as the radiator/engine. You likely start with the prescribed volume cold/cool, but once the coolant warms the pressure rises, the cap opens and some liquid is expelled. Without a ‘catch-can’ once the liquid cools the cap vacuum feature opens and air is drawn into the system. I have been led to believe that as long as the liquid covers the ‘tubes’ the system has a sufficient level.
I would top-off the level and warm the engine to full operating temperature, plus a little bit of idling in the garage. Let the engine completely cool (maybe the next morning), and determine the coolant level. Do not add coolant unless you can see the tube tops are dry. Repeat the process of using the car, idle a bit, allow a full cool-down, and recheck the coolant level. The difference between the two level checks is likely the amount of coolant the engine used/leaked. My bet the thermal expansion of the fluid has masked that true usage. Remember every time the coolant temperature hits a new high, some amount of fluid will be expelled.
Insert my ‘war story’ of the big puddle of water under Brand X every time I used it! That is until I stopped over filling it.