Head gasket 327

1/8" is fine. Some stats have a hole in already.

Do check the fan belt. Make sure it's not polished on the bottom. I had issues years ago with a car where there was more than one belt width, and it turned out I had a mix of pulleys, so the belt was too narrow / the pump pulley was too wide and sitting on the bottom of the pump pulley.
It appeared to drive OK at idle, but at higher revs it couldn't cope and the engine overheated.
When I took the belt off I could see the pulley was polished on the bottom of the groove.

Ivor

Or stick a loose fit cotter pin in the hole, bend open to make sure it doesn't come out, and trim short. 

Update and resolution of my cooling system problems. After much flushing and back flushing with water and replacing the water pump (even though the original pump looked OK to my eye), the problem of loosing coolant through the overflow was gone. However the water was still rusty until I ran the car a couple of days with Prestone Flush which turned the water very very rusty. After many more flushes with hot & cold water, the coolant came out clear. Finally able to install anti-freeze. After all this, I'm convinced the system capacity including radiator, engine, heater & hoses, is 9 quarts, not the 19 quarts stated in the manual.