There are 3 things seized up: The mag plate got seized up with the block neck, the gear case got seized up and the lower piston got seized up at the intake port. The water contacts the piston at the intake port (red circle on the picture). I have removed all the bolts out without heat. I have no ideal of the grey stuff on the head gasket. Only ATF contacted the head gasket when I removed it so. Not sure what you refer to the gray stuff.
