I bet the manifold is cracked too, rusty water in the head intake ports 3 and 4, most likely came from cracked manifold.
JBwelding the cracked block might work temporarily, might not too if there is an internal crack.... You can't JBweld the manifold, or weld it, it needs to be replaced if cracked. Fill the manifold water jacket with acetone, and see if the acetone leaks into the intake or exhaust ports.
A new manifold is going to cost around $300, so best bet is to find a good running complete used engine as Scott said.