I've had a bad head casting that had a pinhole leak where the post holes were bored, a few inches down. So that happens too. Also, hair line cracks in the head casting aren't unheard of. It's Rajkot roulette, so a stand up dealer is important. I suspect a small minority of Rajkot heads or cyliners are flat and without excessive liner protrusion and thus require no attention.
You can do the farmer fix for the liner protrusion if you are VERY careful; I did mine with a large file, with a disk sander for the finishing. No more than 0.005 inch protrusion is desired. A feeler gauge next to the liner lets you easily feel the height of the edge to be removed.
You will also have to flatten the head and top of the cylinder, which can be done with silicon carbide sandpaper glued to plate glass, over foam shelf liner on a cast iron saw bench top. Start with 80 or 100 grit, it will take a while and it won't be that coarse by the time you are finished. Move the head in an orbital manner, check progress via straightedge and feeler gauge.
By torquing down the head on an over-protruding liner, over time it will become concave. Flattening it again takes a lot of elbow grease as described above or a trip to the machine shop.
You can get a couple hundred engine hours out of kludges like a thin smear of high temp silicone around the leaking bits of the cylinder casting. The Rajkot copper/asbestos gaskets, sealed with Permatex Aviation Gasket sealer diluted with a little alcohol, will seal the best when there is excessive liner protrusion and a poor fit from head to cylinder top. Without sealer, they will weep through the asbestos. I wasted a lot of time fiddling with gaskets and sealers until I finally got fed up and fixed the excessive protrusion. (I had about 0.016")
I highly suggest fixing the underlying problem- flatness and fit between head and cylinder. It's critical in a diesel, and not hard to get it fixed right, either by hand or by machine shop.