While conducting the "pre-firing" checks, I noted with chagrin that a leak had developed on the front of the engine block. I pulled the rad (again) and spotted the trouble. The water pump was weeping at the lower right side bolt. I pulled the water pump (again) and the stain on the block confirmed that there was a problem.
It seems that there was a leak between the water pump housing and backing plate - the rust on the block started below the pump housing, and so I removed the backing plate (again). I think I will go with a thicker gasket between both the housing, backing plate and the block. I will also check flatness and the torque specs.
Anyone have a similar problem, and if you used some, did leak sealer work?