It turns out that the gasket was leaking but very "minor leaks". There was no white smoke, engine pulls well.
Coolant is getting into the cylinder only after the engine is shut down after getting warm enough. This is because after the engine is shut down and there is no circulation of coolant. The coolant starts to absorb heat, starts to expand and the pressure increases within the coolant system. THIS pushes the coolant into the cylinder and wetting the spark plugs etc causing the hard start.
I verified this by removing the pressure release valve in the radiator cap, so that the coolant is free to flow into the reservoir when expanding. This totally got rid of the hard start, no more coolant is flowing into the cylinders.
BUT still.. I gonna have the rework the engine head and block, replace the gasket.
I am still figuring out, why did the gasket fail. I have never encounter any overheating so far to cause gasket failure.
