Was the motor freshly rebuilt? If not then i doubt the torque of the bolts is the problem.. I mean you could try and give them an extra little bit. There is no need for the 1.9 gasket, it is for power builds and is hard to get to seal.. (ie. you will likely have the same problem). Head studs are also really only a worth while investment if you plan to run over 20psi and plan to take the head off more than three times. And unless you are running a different turbo then what was available stock, you don't want to be running over 20psi either as you will kill the turbo.
Is the oil leak on the front of the block right beneath the water neck? Directly in between cylinders 3 and 4? It is a common spot to leak for some reason, there is an oil drain right there.. however it is not pressurized so i do not see why it leaks.
If the water gauge is not pegged or close to the top but is somewhere at least near the middle, then it is likely it is only a few degrees above normal operating temperature. Getting a mechanical gauge or an infrared thermometer would really help you out here.. as 30 year old electric gauges cannot be trusted at all.
Also if you are at all mechanically inclined a head gasket on these is extremely straight forward. If it is intimidating all you have to remember is, no matter the job it is all just nuts and bolts. Likely 13mm too
. It is the procedure that is the trickiest part.
NOW, there are several ways you c an go about this. You can fully remove the head, which you will need to disconnect the exhaust for. Or you can go el-cheapo-taco and only lift the head enough to slide a new gasket in (which admittedly I have done twice before..) and enough room to fit your hand in with a sheet of sand paper to scuff up the mating surface of any left over crap that may be there. If you've got compressed air it would be really handy to spray out the cylinders when you are done. Other than that, anything connecting the engine bay to the head of the engine needs to be removed. Such as;
-Intake tube
-valve cover and gasket, as well as oil breather hose.
-drain the coolant, bottom rad hose off the water pump with 2 10mm bolts, remove thermostat and flush it. Also test the thermo while it is out.
-drain the oil (always a good idea after an overheat as you have likely broken it down and it will not lubricate as good)
-the two coolant hoses, front and side of the head.
-four injector lines, 17mm.
-timing belt and cam sprocket, 15mm on the tensioner and 19mm on the cam sprocket.
-the two small bolts holding the metal timing belt backing plate to the head (year dependent), 10mm.
-assorted wiring for oil pressure sensor and temperature sensor.
-10 head bolts, following the sequence for tightening in reverse with increments on each until finger loose. 12mm triple square.
You've almost got the head off, time to lift it. The exhaust either needs to be removed for complete removal of the head.. or the head will need to be lifted with an engine hoist to be supported mid air whilst you work.