problem with water leak

I've been working on this 25hp # E25REOR* I'm getting water into the pistons, It had gotten hot at one time and partially melted the lower water deflector. I pulled head , got it milled flat, replaced deflector. Also checked cylinder block with 24in* machinist scale,looked to still be flat. Installed heat w/ new gasket, torqued bolts to 140 then 185 then 235 in lbs. in a pattern like this

**
** 9-10
*** 5-6
*** 1-2
*** 3-4
*** 7-8
*then* installed* water jacket on the head. Still getting mikly oil mixed with water out of the exhaust. My best guess it that the block itself is warped. Cylinder walls looked good with no cracks , so how is water getting into the cylinders ?? I'm at my wits end, any help or advise would be greatly appreciated
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You're in the ballpark pertaining to the head bolt torque speciafications but the sequence of tightening is not correct. The proper tightening sequence is as follows.

9....10
5.....6
1.....2
4.....3
8.....7

Very unlikely the block is warped. If it was, it would be obvious even with a plain straight edge.

Water can gain entrance to the cylinders via the exhaust baffle plate area, and usually does if overheated bad. (Most Likely)

Entrance can also be gained via the powerhead base gasket area but this is not a common occurrance.

Thanks fellas, I'll get the gaskets on order. joereves, I did torque in the sequence like you stated, it's just that I've been up most of the night and I'm way tired.
Thanks again. When I get finished I'll post back and lat yall know the results.

The milky oil in the exhaust is fairly normal for a 2 stroke.-----Especially if all it has done is idle for a while !!

Went ahead and ordered gaskets. racerone, it has sat for close to 6 + years now. The river is only 20 min away, maybe in the morning I'll take it down and run it for awhile and see if it clears up. If not I can always replace the gaskets. Besides Ive got 2 more 25's waiting to get worked on.

Well ,pulled the plates off and didn't really see where any water was getting through. Got the outer plate milled flat and replaced gaskets. STILL getting water in the engine and milky/foamy/oily residue out of the exhaust. Also popping & spitting out the exhaust. Rebuilt carb,new plugs, spark jumps 7/16's and verified consistent spark by a timing light. Not to confuse anyone but this is a different motor than the other post. Ready to throw in the towel here..................

I think I have it figured out. We have well water, a very deep well and it is frigid cold. Even with T-stat it's not getting up to operating temps. You can hold your hand on the block all day long and it barely feels warm. Never noticed it on the 7.5 cause its run in a large container. The 15 hp is run on muffs like the 25 but I never noticed any milky exhaust until I went from a white OMC prop to a new Solars black one yesterday. Saw the same milky residue. All motors have T-stats installed. My guess is that its unburnt fuel mixing the the water.Racerone , I think you're right. Guess I was being paranoid. Opinions anyone?

If you're NOT getting water into the cylinders, water is not entering the engine at any point. Apparently we will need to scrutinize the post explanations much closer.

Well after getting the head and exhaust gaskets done which DID fix the water problem. I was still getting milky residue out of the exhaust which did look like I was getting water in the engine.* Put the boat in the water and got a bud of mine to follow me in his jon boat. After barely getting on plane he caught up and said all he smelled was fuel while he behind me. Immediately put the boat back on trailer. Pulled carb and checked hoses, all looked good. Hook up muffs and started it up in drive way. The dead grass was from a few days ago which I didn't notice unburnt fuel. What I found out the problem was a cracked diaphragm in the fuel pump. I guess it was letting fuel leak into the block and what I was seeing was it mixed with the water in the exhaust thinking I still had a water leak. The stained gravel is from when we got it back from the river after a test run. Thats when I decided to check the fuel pump. A big Thanks to all that helped !