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The oil gallery in the block feeds oil to the head at that location. It's a drilled passage in the block between cylinders 1 & 2, with a corresponding hole in the head gasket aligning with another drilled hole in the head near its outer surface. You can see the passage in the block in the bottom (of five) photo in this posting:
http://www.brickboard.com/RWD/index.htm?id=959227&show_all=1
The head gasket is still in place on the block, so its large oval hole at that spot is what you're looking for. The head (picture above) is flipped over and around so Cyl #1 is at the left, but you'll see the oil passage and can tell if that's where your leak is.
The gallery is under full oil pressure and any porosity in the casting there will allow seepage. Even under pressure the typical tiny, restrictive passage of a porous casting will barely seep - and look like a gravity-fed leak.
I'd suggest your first step is to get everything near-surgically clean in that area, then run the engine while pinpointing the leak source. If it is porosity in the casting, I don't know what you can do about that short of replacing the head or getting a specialist machine shop to weld it. I doubt that glues or sealants would work, but others may have had success.
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Bob (son's 81-244GL B21F, dtr's 83-244DL B23F, 'my' 94-944 B230FD; plus grocery-getter Dodge minivan, hobbycar 77 MGB, and a few old motorcycles)
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