Mine did exactly the same thing. The water leaking from the base of the cylinder was caused from coolant leaking past the head gasket and draining into the cylinder stud holes in the cylinder block, then seeping out around the bottom of the cylinder. I tried every trick to "reseal" the stock copper/paper head gasket and the best I could do was slow down the leaks. One I installed the composite gasket using some hylomar around the water ports all was well. I highly recommend buying several of these gaskets
http://www.ebay.com/itm/230632439673?ssPageName=STRK:MEWAX:IT&_trksid=p3984.m1423.l2649 You also should check the cylinder liner protrusion and correct any discrepancies or the composite gasket may not fix the problem, if it does fix the leak too much liner protrusion will destroy the gasket and definitely make the gasket a one time use. When I took my engine apart I found my liner was protruding .016" above the cylinder deck surface!