How much water? If the level is a lot higher on the dipstick, then it's probably a cracked block INSIDE the engine where you can't see it.
You can block off the water hose to the manifold and the intake hose and pressure check the block and head and head gasket, before taking it apart. If it pressure checks ok, then it's not the block. Look at the manifold. But if it's a lot of water, I would suspect an internal crack.
Cracked block? bad manifolds? search those in here.