Well, now that you have successfully diagnosed the problem, what do you do? If you are anything like me, you will open your hood, grab a smoke and a seat, and sit there for a while thinking about how much it sucks that you're going to have to do that whole header thing AGAIN!
I would say that your gaskets are completely shot, and if you look real close, you will probably be able to actually see chunks of what used to be gasket that are just flat out missing. GONE! Have I got my point across that this has happened to me? What I did. Bought a set of Mr. Gasket Ultra-seals, and a set of Stage 8 locking header bolts(key) from Summit. The stock bolts that come with the BBK's are definately too short, ESPECIALLY on any of the bolts that have something else under them. For example, the one that holds the dipstick. This is why you want to get the Ford Racing Stage 8 bolts from Summit and not the plain stage 8 bolts for a mustang. The ones with the Ford Racing part# or reference, if you will, are 3/8-16 by 1" long, while the others are only 3/4" long. Get the 1" long ones. Just keep telling yourself, I'm not going to do this again! and buy the bolts. They are around $45 for the set. Mine is holding up great. I couldn't be happier or more confident in this holding up for a long time. Take a look at your collector flanges too, while you've got the headers out. They are only skip welded in like 3 or 4 places around the diameter of them, and seem to crack the welds when you tighten the mid pipe to them. If this happens, then the ears of the flange, where the studs are, will just start to pull down and not really tighten up. I took mine in to work and had them welded all the way around solid. If you look real close, you'll see the cracks in the welds, if they are there. Good luck! Russ