Your head gasket has gone. A very expensive job, between £400.00 and £650.00. My advise would be to buy a decent second hand engine and put that in. Its much cheaper and heads can be prone to warp again once they have warped once. Where are you from? e-mail me: trit666@hotmail.com
Kind Regards.
                
 Tristan Hanwell
                
 April 2006