[Lynn Eades]

Tony, I would suggest it is time to;
1. descale the block.
2 shout it a valve grind, or you'll be back in there soon. the valves don't look that great. maybe it's the water?
3. give careful attention to the threads in the block.
Does it have bolts or studs. Myself, I would go for studs and nuts with hard washers.
If you had, and want to stick with bolts, I would consider a new set for the maximum contact area (which will help to prevent a thread being pulled in the block.
Do NOT be tempted to over torque it. You can go back and re torque it a few times. I recommend you do, but don't go over, on the torque.
A lot of the flathead V8 guys suggest not tapping the the block threads, at least not with a new tap, but rather with an old worn tap, or with an old head stud with a groove ground in it, so that it functions like a tap. The idea is to clean the threads, rather than cutting metal away. Is that clear enough?
Old flatheads need a bit of special care. They can be a bit temperamental. If you buy head studs they should come with a "bulge above the block thread that tends to stop water leaking up the stud, and out at the nut and washer.I would still apply a quality sealing compound to the studs when installing them in the block. The torque figure for installing a stud is quite low. Seek advice from your (older, caring) engine reconditioner.
Your old head gasket was (I assume) a copper asbestos one. The asbestos does absorb water.
The care Richard was talking about with regards the head, also applies to the top of the block. Use a straight edge and check your block length ways, and check there are no depressions at the thin bits between cylinders 1 and 2, and between 3 and 4.
A quality composition gasket might be a better bet, but as everything is a compromise, and it may come down to availability. your copper asbestos one was easy to remove, right?
Not wanting to be a doom and gloom merchant, but milky oil is the result of a lot of water in the oil. The jeep block is prone to cracking around the distributor boss. This is a possibility, I think more common in the Ford block. Check this out.
You may have a crack down low in one of your cylinders. Check.
Usually the compression pressure forces compression gases into the cooling system, and when the head gasket leak is bad, it blows the water out fast. The cooling system pressure is only 7? lb. Not much compared to combustion pressure. This is why I would check further. (if it was blowing the water out badly, it can let the water run into the cylinder when it's stopped, but usually the water blows from the radiator, before it gets bad enough to put a lot of water in the oil. This does also depend on where the gasket has failed.
Take your time to find the correct answers. Good luck!