some guy

As I was doing my clutch in the 83 wagon, I decided to drop the pan to take care of an oil leak, so ended up redoing the oil pump and the pan and the water pump since I had one lying around. During the course of around 4 days I have had the engine sitting on a coffee table on it's back. Is there any way this could have caused some sort of seepage of water into the #2 cylinder? I put the motor back in a normal sitting fashion with the pan down and pulled all the plugs so I could adjust the valves and while turning it over water came out of the #2 plug hole. Not alot of water but enough that I noticed and almost spilled my beer making a pretty silly looking face. When I originally pulled the engine the antifreeze looked pretty darn fresh and clean and there was no water in the oil. Is there any way that the intake gaskets could be bad and let water leak in?, or should I just go ahead and pull that head off? Thanks!

So that rear main seal looks ok? I have the subaru mounting gasket for the oil pump and one o ring just not that deformed one.

So, I am replacing the clutch in my 83 wagon and noticed a very large amount of oil on the back of the engine, I took off the flywheel and from what I can guess the rear main seems fine.. although that picture was taken with the engine laying on its back on my coffee table so I could pull the pan off ( hence the freshish looking oil there ) If that seal is good is it possible all of the oil is from the front seals? I notice a rather thick coating of gunk all over the bottom half of the engine. I pulled out the oil pump since it seemed to have a custom made gasket of high temp rtv and noticed that one there is a deformed looking o ring? is that just a regular o ring I can replace or is it some fancy specialty part? or is it supposed to be all deformed looking? Should I be using rtv when I put the oil pump back in I have a mounting gasket and a new o ring for the front part just not that little side area. Thanks! (hopefully the pictures work, they kinda suck silly smart phones(hmm preview doesn't show the pictures but little red x's gets the idea across right?))

Yeah straight line, tires are all the same. I suppose it could be a non stock rear too, iirc the sticker said 3.90.

This might be the wrong area, but seems at least half correct. I have a mystery transmission in a 87 gl, I say mystery because when I put it in 4 wheel drive I get some major binding as one would expect with different gear ratios. I think the motor came from a wrecking yard, when I was fixing the linkage on the shifter ( when I had hope ) I couldn't find any sort of identifying marks on the transmission. The wagon itself is beyond help with rust. I stumbled upon a 92 loyale on craigslist that doesn't seem as bad, would it be accepting of mystery transmission?