| I made the cutting head and used a standard Bridgeport milling machine. Dialing in the cutter head to the deck surface and bore was very tedious. There's other, more simple ways to o-ring a block with tools made for domestic V8s (search Isky o-ring tool), but with the small bore of the VG this was the easiest way for me to do it. The groove cut is 0.0395" wide by 0.030" deep and 0.041" SS wire was installed. The heads have a receiver groove that is 0.006" deep which allows approximately 0.005" crush directly at the o-ring. Gaskets used are SCE copper, 0.043" thick, off the shelf items. 
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Here are some pics of how I o-ringed my block - 
