I saw a video on Powerstrokehelp that showed a block that had cracked in the area you describe. This was due to a highly tuned engine on a lifted truck with a young kid behind the wheel. Not saying this is the case with your engine, but its a possibility.
I'm not eliminating any possibilities, but this engine came out of a school bus with a bad transmission and rust. I personally know the people at the salvage yard the engine came from, and they drove the bus to their yard. This truck would not make it more than 5 miles with this leak. I'm not denying the possibility, but it seems incredibly unlikely that a detuned and fleet maintained bus motor has a cracked block.