At This Point
Before pulling valves.
Check valve stem height
Prop the head up where you can push down on the valves with the palm of your hand. Feeling for weak valve spring pressure. Then feel for lose valve guides.
Worked on a engine years ago that had good compression if you checked it pulling one plug at a time. With all 8 plugs out, it didn't have any compression. Valve springs were shot. With all plugs out the lifters would pump-up and hold the valves off the seat. You would get a poof on the first spin, but if you released it with engine spinning, no more would come back.
And say again where that water went when you checked #4 exhaust.
Clay
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