So...finally got the engine out and heads off. Water issue was a leaking head gasket after all it seems. That's the good news. The less good news is there is a lot of wear and tear in bearings, crank, pushrods, rockers etc etc that the motor needs a complete refresh. The block and heads themselves were in a lot better knick than I was expecting, everything is just a bit tired.
Block will be pressure tested (one cylinder has what may or may not be a crack), decked and honed if need be, new crankshaft and whatever else needs updating, hoping to have it back on the road in a few weeks. The rebuilder I'm dealing with now (not the first bloke who was largely clueless, did nothing yet still saw fit to send me a bill) is a ford nut and seems to know what he's talking about, which is a big relief. He was very patient and walked me through all the engine parts that need updating and showed why.
On the plus side in a few weeks I'll finally have my car back with a fresh new engine for the most part. Can't wait! Thanks to everyone here who offered advice and helped me track down people who knew the car for more info etc.