i'd say gasket. have had this before in exactly the same place.

then again, i've had a crack between the waterway and the head bolt hole as well in that area. that didn't leak or anything though and i drove it for a couple of thousand miles on stg 1, and another couple on stg 3 and it never caused a problem. changed the block anyway though, but only to another 205. it's plenty good enough for stg3.