[size=12]Permatex #2 is best for bolts that will enter the water jacket. Indian head Shellac for all gaskets (apply to the block side only) except for the head gasket. For the head gasket there are a few schools of thought. Some say put nothing on it. Some, like me, say spray copper sealer (Permatex makes a good spray) on the block side.
Most leaks, if everything is near-perfectly mated, sealed and properly tightened, are caused by crankcase pressures associated with an improperly maintained PCV Valve.[/size][/b]