rec.autos.antique had this by George Peterson that is written so well I just had to show it here. Topic is 1960 Ford falcon
I'm not familiar with a 4.6 straight 6. The Falcon came with either a
144 CID or a 170 CID straight 6, and I'm not sure that the 170 was available in 1960. I am familiar with these, having owned several.There are a variety of possibilities - blown head gasket, warped cylinder head, blown-out spark plug, bad plug gasket, broken or worn rings, and burnt valves are some I can think of. The blown-out plug is the least likely and most easily detected, so we can probably rule that out. Still, since it's the easiest thing to deal with, check that first. Do this by replacing the plug and gasket, making sure you tighten it properly. A blow-out plug won't tighten up.
Put a compression gauge on the cylinder, pull the coil wire, crank the engine around by hand to TDC, and listen. If you hear air escaping into the exhaust system, this is almost certainly a burnt exhaust valve. IMO, this is the most likely. If you hear air escaping into the intake manifold, the intake valve is defective (probably cracked). If you don't hear air escaping but the compression falls, it's likely rings or head problems.
Bad rings generally cause excessive oil consumption, so that's one thing to look for. The oil frequently blows out the vent, rather than being burned, so you will see drips of oil on the driveway, and the lower part of the engine will be covered with a film. The oil breather on the car is a downtube on the right front of the engine. That's where most of the excess will blow out, but also check the filler cap.
A blown head gasket will frequently put gases into the cooling channels. To check for this, warm the engine up with the radiator cap removed. You will be able to tell when the thermostat opens up from the increase in water flow. If you see a flow of bubbles in the coolant coming out of the upper hose, you have a blown gasket.
The same symptoms may show up for a warped cylinder head or block. This is usually caused by overheating. The only way I know to check this is to remove the head and have a machine shop check both the head and block for flatness. Whatever the cause, you will probably wind up doing this step as part of the rebuild anyway.
The last items will be a cracked head or block. Cracked heads are difficult to diagnose without disassembly, but these can be repaired. The old engines are cast iron, and cracks can be plugged or welded.