[700rpm]

I think you are way overthinking things. Try simple first: your oil leak may be due to overfilling the pan (you said you put 4.5 qts in at the change). Drain a quart out, check the dipstick, fill carefully only to the full mark. Drive it and see if it still leaks. Greg is right about the filler tube.
It doesn’t sound to me anything like a blown head gasket. Maybe retorqueing the head nuts would stop any possible leaks. Loosen them all and retighten according to the book.
If you are using a stock dipstick it won’t touch anything in the bottom of the pan. It isn’t long enough. Your coolant may have overflowed because it was was too full.
How do you know there’s water in the cylinders?
If the car was running well yesterday there is no reason to mess with the timing or carb setting today. Quit fussing with it! Tinkering is one thing, but arbitrary adjustments only complicate things. An oil leak will not be solved by adjusting the timing and carb.