So......
Good compression.
Can't find where the water came from.
Not yet found where the metal came from.

Was there any evidence of metal shavings in any of the bearings?
I would cut the oil filter apart with a can opener, unfold the filter element and see if there
is any shavings in the filter........it should have caught them. Open the oil pump and see
if there are shavings in the oil pump. I'm presuming you already checked the oil pan for shavings.

I'm thinking the oil pump metal may have been a previous encounter with previous owner
but maybe the metal did not get far enough in to damage anything.

If you cannot find anything wrong with the previous block, and you will put a head gasket on another
long block that you will have to buy anyway......if there is nothing wrong with the previous block, is it
worth the price of a head gasket to clean everything and put the head gasket on the previous block?