Disclaimer: My engine experience is limited to tearing down and rebuilding my carbs. I've never touched the actual engine block on anything I've ever owned, but have been around a few engine teardowns. I really can't see why it wouldn't be the head gasket. I really have no idea how a water channel in a block would crack into the cylinder, but once you take the head off it should be pretty apparent from the gasket if the channel is leaking in the cylinder. Tearing the bike down to the engine isn't the worse thing in the world to do on a bike, as long as you have some basic tools, metric ratchet set, few screwdrivers, so on.