Just so we are clear, that picture I posted was taken from a known working motor. So, you should be safe to leave it unplug.
Thanks. Sorry I have not followed up on this. I was sick for a while then had bad weather. It turns out the tread is the same as the bolts used to secure the manifolds to the block. I bought a couple of short bolts for that. Then I went to a local totally cool mechanic (
http://www.baronsmobile.com/Home.html) and we got to work. I ha a problem getting compression in the #1 cylinder after I set the valve lash and he walked me through the correct procedure. It turns out that tightening as directed in the manual to where the rod stops turning and then a half turn was probably OK but with my habit of giving it "just a little more to make sure" I had over tightened all the valves. We fixed that, got the timing properly adjusted and ran the engine. She's purring now. As for the hole in question the mechanic said "there's no water or oil shooting out of it don't worry about it."
Total time on the engine today to get it running was 2.5 hours with Baron making sure I got it right. Cost for his time? He asked for $40 and I gave him $50. How many boat mechanics do you know that do that? Test cruise this week sometime.
Again, thanks everyone for all your help.