Then the manifold is the culprit for the gobs of water.
Important, get the coolant sucked out of the engine and be ready to flush the oil a couple of times once you get the new manifold on. Be careful removing the exhaust, old exhaust systems that have a year or 2 left can easily snap off with not much effort.
If you "hydrauliced" the engine you still may have a small breech in the head-gasket thus the low #3. Had you done a compression check any time before this incident? If so was #3 low?
Dave Neptune