Toyota Repair: moisture out the tail pipe, oil pan repair, timing chain cover


Question
RE: 1992 Toyota pick-up, 22RE, 2 wheel drive.
Problem: Moisture out the tail pipe.
Background: Engine got hot and water was found in the valve cover and oil pan.
Repair: Assumed blown head gasket.  I found that the #2 cylinder had the most water.  Removed head and had it resurfaced. After reinstalling with new gasket set, etc. I found that the problem was not fixed.  As soon as the truck was started, it started blowing white smoke out the tail pipe (just like before repair).  As the truck was left to idle, the white smoke got worse; eventually water drops fell from the tail pipe.  Second attempt to repair was more extensive.  This time, I completely removed the engine from the truck.  As I disassembled the engine, I carefully looked at the newly installed gaskets to see where the water was coming from.  They all looked good. Next, I had the Head pressure tested - it passed the test.  Next, I had the block tested as the #2 cylinder was severly pitted.  I had a trusted machine shop put water in the block and they even pressurized the block to see if there were any leaks; none were found.  They recommended a new sleeve for the #2 cylinder.  I had a new sleeve put in and had the crank polished.  To complete the rebuild, I added new rings, seals, etc.  Since nothing obvious was found and repaired, I looked at the timing chain cover to see if perhaps one of the water passages near the timing chain was leaking.  The cover was good.  After looking more closely at the head and the #2 cylinder valves, I found what appeared to be rust on the intake valve stem.  This lead me to believe that there may be a problem with the interface from the intake manifold.  I could not see an obvious problem, so I had the machine shop take a look at it as well.  They could not see a problem with it either.  However, they did not have a way to test it.  Without confidence that the problem was fixed (ie: nothing found wrong), but with hope that perhaps this rebuild would be successful due to the extensive nature, the engine was rebuilt, and re-installed.  New head bolts were used, and everything was carefully torqued.  This time the engine started right up and the white smoke was still there, but not as bad.  This time, I am not finding water mixed in the oil, but after idleing for a period, water drops do form and drop from the tail pipe.  Note that the truck sat for almost a year between repair attempts.  As a last resort, I have purchased another intake manifold from ebay.  However, I am somewhat hesitant to change the manifold as the one from ebay was powder coated even on the mating surface and there is a low spot (Paint chipped) near the #4 cylinder.  As the truck needs to be smogged soon, please provide any advise that might lead me to a solution to stop the moisture out the tail pipe.  Someone suggested that I should take the truck to the Toyota Dealer and let them trouble shoot it.  What do you recommend?

Answer
The only way that steam comes out of the tailpipe is for coolant to enter the combustion chamber, I know you said the head was tested but maybe they missed something, my recommendation is that you replace the cylinder head, although the head may test good and show no leaks on the test bench things are different under operating conditions, one of the most important aspects is operating temperatures, as you may well know metal expands as it is heated, therefore a small crack may not present a problem on a cold cylinder head but as soon as combustion temperatures are applied and the head begins to heat up the small crack will become larger and cause a leak, I have read your question carefully and the only answer I can come up with that makes any sense is to replace the head, good luck and let me know if it fixes the problem.