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Sorry I wanted to get that sent so it would not time out. I pulled the pump and brought it back to my place to install a gasket and stop the leak. Plan on going back in the morning and raising the air pressure to 60 PSI. Dave has a friend with a shop that repairs and leak test blocks and uses 60 PSI to check them at. We are at a loss and thought for sure we would find something leaking Today. We are spraying everything in the valve area and anywhere that could leak into the oil. Dave would not have believed me if I didn't take the drain pan with all the water in it to show him a week ago. If anyone has a idea where to look or what we could have missed please let me know, we dont think 10 PSI more will make a difference.

Did you rotate the crank to different position. Retest every 90 degrees so make sure a single piston rings are not sealing a pin hole bore defect in one positon.

I will first say i have very little experience with Packard I-8.
I have worked on a lot of inline flathead everything else.

The "wet" condition in the intake runners, and "to clean" spark plugs makes me wonder if there is a source point that is drawing water from your cooling system, (via vacuum in the intake), and then feeding it into your engine.
The only thing i can come up with would be the double acting fuel pump.
I can't find a good schematic of everywhere the water jackets are in the block.
Wondering, its a shot in the dark, if there is a jacket near the fuel pump mounting position on the block. Maybe.
If it is possible, to get a coolant leak in that area, would it explain water in the oil, and the "wet" intake runners ?
(I am not familiar with double acting pump so not sure if this is possible)

I have seen the leaky cylinder walls on freshly bored blocks before.
The L-134 Willys blocks, L-218 Dodge engines, and more than hand full of Henrys V-8's.
Pressure testing always seemed to do the trick. Could always find droplets leaking out of the walls.(No pistons installed)

I maybe, and probably am, completely wrong about the fuel pump thing. Just shooting the dark for another idea.

Yes I had each cylinder at BDC and TDC and one point in between. I hate to say it but I was hoping to find a pin hole in cylinder bore at least that could be repaired by boring it out and having a sleeve made. At least I think it could repaired if that was the issue. Now we are starting to wonder if the sealer worked after running it for 1 hr draining it and letting it set overnight to cure. Unfortunately the sealer damaged the crankshaft since some of it had to get in the oil before sealing the block up ??

You are correct on it being a double action fuel pump my car is only using the top half. When I got the car 1 year ago they had installed a electric fuel pump and I have left it that way until I got everything else corrected and working. It does have a line from top half that goes to the manifold and the other goes to a vacuum for the wipers. I will be going back to Daves tomorrow my machine shop and look and see if anything is close to a water passage. As for it being able to pull water in from somewhere else I dont know. Maybe some of these Packard guys that know way more about these engines then me would be able to answer your question. Thanks for your input.

I know these engines well and have several 1951-1954 types out of cars in my shop but can't think of anywhere that water can get into the oil short of a crack. The only remote possibility is that a water pump bolt was too long and broke into an oil passage behind it but not sure there are any. A crack in the water jacket in the valve area would also run into the pan.

Any news on your 288 ?

I was just getting ready to update. We put air pressure to 70 PSI with head and pump on ,then magnafluxed & dye penetrated every thing. Filled engine with coolant and left at 70 PSI then built a tin cover around it and the top. Heated it with a Master heater and ducted the heat under the block for 1 hr temps got to !60 to 200 F and " still no leaks ". Dave thinks the sealer worked I'm not as optimistic .He is going try and polish the crank and have me put it back together "new gaskets and bearings" then run it on my test stand longer. " Any thoughts from you Packard Guys"

It was supposed to be 160 to 200 F sorry.

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My thought would be the same as yours. I hate knowing there is/was an issue, but not finding it, especially on something so significant. But given your tests it seems good, but you tested before and had good results. 🤷‍♂️ Hard to be 100% confident, but I'm not sure what else you should do at this point before putting it back together.