Good news and bad news.
I have found the leak.
It needs a total engine strip down.
I made up my abrasive mirror and rubbed the surface of the block - it showed some low areas but with a straight edge I determined that they were only a couple of thou under.
I then filled the block to the brim with water and probed around the margin of the cylinder liner with my rubber nosed air gun until I found the place that caused bubbles to emerge from the water. It is on the lateral side of the liner where there were originally water passages. These had been filled in before my time. With very close examination the tiny gap can be seen but it is enough to cause vigorous bubbles. It lies beneath the copper lining to the head gasket bores but as there are only a couple of mm of liner left that is not enough to seal it.
I shall strip it down and take it down to Manchester to my good friend Nick Gilfillan of Cold Metal Spray who has almost finished restoring my other Lambda block from the VII torpedo. It is about to be vacuum impregnated and should be done in the next week or so. I shall have the VIIIth treated similarly whilst it is there.
I shall engage Freyja in the works, it is time I passed on my knowledge.