I agree with Steve and binthere.
Filling your radiator to the top (overflowing) is a little (not a gallons' worth) too much.
If you overfill it, the cooling system naturally "seeks" it's happy full level by expelling the excess out the overflow tube when driving, and a dye test kit should reveal that.
I believe drilling the small hole in the thermostat is a good idea, but I understand it's purpose is as a water-pump bypass that allows some coolant to flow before the thermostat opens, and this enables more even engine warm-up, a good thing.
I think it can also help prevent an air bubble in the system that could interfere with filling the system completely until the bubble breaks.
As much as you've been driving yours already, I can't imagine a bubble is the issue, but who knows?
On water sitting in the muffler, you could drill a small drain hole in the tin at the lowest point and see what happens.
And then seal it with a dab of JB Weld.