This can be a common problem with this series of motors. It can be repaired, but requires a complete tear down of the block. First let see if we can make sure you have the problem. Pull the little plastic cover over the regulator/rectifier & the rectifier out of the top of the block. You should be able to see the glue lines of the block at the #1 cylinder. It will be close to where the exhaust port is. Any dark (exhaust smoke) in this area indicates a possible water leak. Pressure testing the block is the only way to know for sure. If your combustion chamber (head, top of piston, exhaust port is clean then you have a problem)! The fix requires removing the sleeve, welding the crack, machining the area, & re-sleeving the cylinder. We did this on hundreds of blocks back in the day. Jay's Block Shop, Sparta, TN is one place that does this. You need someone who is familiar with this failure & repair. Others around the country do it. I am retired now. Hope that helps.