the whitish valves are signs of running hot or running lean. If water were seeping in, the carbon would be gone from the area where it seeped. The steam cleans the area. Some combustion gases could have been seeping into the water jacket and caused the over heating, but now that the head is off, its moot what you should have done.
Clean the block thoroughly by scraping off as much of the gasket and sealer as you can. I like to use Rolok discs for the final clean up as they get all the old sealer, carbon, mineral deposit, etc. If the studs are in, be certain to clean well around them. Using a vacuum to suck up the debris as you work is a good idea. Before you button it up, draw down the pistons and clean any debris that got down between them and the cylinder wall. A final wipe down of the deck with a brake cleaner soaked rag will get it squeaky clean. Now would be a good time to have a machine shop check the head for true flatness and surface it if necessary.