Peugeot 406 headbolt spacer in wrong hole

we have just refitted the head on our 406, 1.8 16v.we where told the spacer needs to go in the inlet side.but when we torqued it down,the bolt with the spacer stripped the threads out of the block. when we looked at the bolt we could see it only had around 10 mm of thread that was in the block. also when we where doing the opposite bolt it seemed to be winding in further than the rest.we swapped the spacer to the exhaust side and it all retorqued down nicely.when we started the car it was fine except for water flowing down the back of the engine.when i looked under the car,(no ramp to lift up)i could only findit coming from the back of the water pump.have i damaged the engine block by torqueing down without spacer.?