It's possible it could just be the gasket.. It doesn;t take a whole lot of water in the cylinder to make one heck of a lawn sprinkler out of it.. At least it sounds like you know which cylinder to check out.. Inspect your block around the head bolt holes, and the cylinder wall.. Look over the head for visual cracks (except between the valves as long as it's no wider than the thickness of a dime, that's okay).. If the gasket is okay, no cracks noticable in the block, and nothing visable on the head, you should probably have it pressure tested...And I know you mentioned funds are tight, but throw those head bolts away and get head studs.. Those bolts are the reason for alot of cracked blocks and blown gaskets.. Your block may not be cracked now, most of the time they crack when your torque the head on.. Do a search on the subject, you'll understand.. Studs are usually cheaper than hunting for and replacing the block..
Did you install the gasket dry as in no sealant applied? Modern gaskets are designed to be installed dry on clean mating surfaces. I am thinking that a gasket replacement is all you need to do. I wouldn't bother with changing the bolts either. This is assuming that a close inspection reveals no thread boss damage. When you fill the engine after a new clean gasket is installed, use only water to start. The higher surface tension of pure water will not penetrate a gasket seal as easily as a mix of glycol and water. It will give the new gasket a chance to bond to the engine surfaces.
Usually with close visual inspection you can see cracks in the block, generally around the head bolt holes..