Hi Goose
The leaky rocker cover gasket may explain the brown gunge on the plug insulator - this is nothing serious, but could cause the HT to track and cause a misfire.
Wet liners - I don't know what your mechanic means by 'gone' - there is no reason at all for anything to happen to them unless they are disturbed by head removal, and, as I said before, if the seals at the bottom fail for this reason, it will cause water to seep into the oil, which will become a gooey mess. It would certainly not need a new engine, just an overhaul. Your leak test proves there is no leakage between the combustion chambers and the cooling system.
But, in your case, there is no reasoon to suspect anything is wrong with the liners or seals.
Remember, your pint glass is half full, not half empty [;)]
missing fault
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