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I was hoping I could get some opinions on an issue I have.

After breaking in and running a rebuilt Pontiac 400, I noticed that there was a little bit of water dripping out of the exhaust. I concluded it was condensation, although I was a little puzzled why there would be condensation from running an engine in a heated shop. I remember before I tore down the engine, it used to drip black sooty water.

To trace down a few other leaks at heater hoses, freeze plugs, etc, I pressurized the system to about 16 PSI. There were no external leaks, but the next day the pressure was completely done to zero. I am scared to death that there might be an internal leak like a head gasket, cracked block, etc. I have a few ideas to check for water leaks but haven't been able to try them yet.

The machine shop bored the cylinders and rebuilt the heads, (they pressure checked them, I'm not sure of the block.) They said the block didn't need decking.

My question is should the pressure remain in the system indefinitely?
 

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I believe there should not be condensation from the exhaust unless the overnight temp dropped below 60°F, and then, a far chance.

Shops don't normally pressure test a block, but can be done.

Residual pressure overnight should have some left over the next morning. You might pressurize again and spray soapy water or Snoop®, leak detector from a HVAC store, and test the shop connections for leakage and use the Snoop for other items - tank seams, etc.

The other method of test is to inject shop air into each TDC cylinder and look for bubbles in the rad coolant. Leaky head gasket or leak to the exhaust side. Generally, the cleanest spark plug, might even have a little green color on the porclein, is the suspect cylinder.
 

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Coolant in the combustion chamber usuallys get burned and emits a white, sweet smelling smoke out the exhaust, not dripping water. Too much coolant in the cylinders will cause hydro-lock and possible engine damage like a bent connectiong rod.
 
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