ok- 1st you'd be lucky to see 325 hp with that set up.
2nd- that 292 cam requires special springs because of the lift.
3rd- if you got water in the cylinder then you got a busted head from too much lift with that cam on stock heads.
OR you ran it too lean, and heated it up real good....I have never blown a head gasket so bad that it filled the cylinder, so I doubt this one.
Pick one & call the engine builder - if you can find him, and tell him to refund your money.