Hard to see in the pix ..... any chance that the head has been removed before you got the motor , looks like someone has applied some sealer to the head gasket and those " o rings " are sealant that got squeezed out when the head was torqued and set hard .
I used compressed air to suss out just how the water flows around the whole cooling system . One thing I found is that there can be small orifices in the water jacket that , if deep in , can be hard to see specially when things get a nice (cammo ) coating of crud . May be there to prevent air locks or aid in circulation ..... whatev . Wouldnt take much to block one . I only found the 1st one with the compressed air .....I couldnt figure why the air was coming out where it did .... then found the hole

I used compressed air to suss out just how the water flows around the whole cooling system . One thing I found is that there can be small orifices in the water jacket that , if deep in , can be hard to see specially when things get a nice (cammo ) coating of crud . May be there to prevent air locks or aid in circulation ..... whatev . Wouldnt take much to block one . I only found the 1st one with the compressed air .....I couldnt figure why the air was coming out where it did .... then found the hole