If that stat was in it might be stuck closed or partly closed. It's pretty well holding cooling system psi but it might be possible for combustion much higher pressures to be bleeding over 1 way into the cooling system. As said head gasket would be a likely suspect. what I would do is go to an emissions testing station & have them stick the probe in the air above the radiator coolant level just below the rad cap & it'll pickup any hydrocarbons if there is combustion gasses present and there is the blok check fluid that turns blue if combustion gasses are present (suck some air above the coolant up in an antifreeze tester with the balls in it with some of that blue fluid in there). I'd confirm/deny combustion gasses present or not & you've pumped it up to 15 lbs (how long did it hold and how far did it drop) then tear it down. EDIT your timing was not way retarded?/fan was functioning I'm assuming. On second thought a stuck or partly stuck stat would not show water under the valve cover. Might actually be an intake coolant port leak, they can be troublesome especially if the front cork gasket is a bit too tall for your head gasket/head/deck final "height" and it dont let the 2 front intake/head coolant ports/passages seal up tight enough