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The valve above the pipe is a heat riser valve, it's got a thermostat spring attached to it and it opens when it gets warmed up (or.. until they get loose and rattle and you tack weld it in the open position.........). It's supposed to help it get warmed up faster
As far as the head gasket... a quick easy way to check it is take the radiator cap off, make sure the radiator is full, and crank it over... if you've got a blown head gasket you'll most likely have pressure in the cooling system and coolant will shoot out the cap........ but this looks like a small block, and if so, the coolant flows through the intake manifold, so maybe you just need to re-seal the manifold?
You could have a head gasket that leaks out, or it could be a freeze plug leaking in either the head or
the block.what you need is a pressure tester to pressurize the system and look for the leak