You're testing my memory, and I'm assuming you're talking about the 2.25 petrol engine, but I used to torque to 65ft/lbs and let it run for a day or so and then recheck the torque by backing each bolt off a fraction and re-torquing to spec. 1/8th of a turn sounds about right. It never occurred to me to do it again! I wonder if I would have found the same as you?
I recall using both the original copper head gaskets and the (then) new you beaut composite ones. From memory, I used Hylomar on the copper ones but I forget if the composite ones were meant to be installed dry. If not, I would have used Hylomar, too.
I'd be inclined to let the motor run for a week or two (assuming it gets driven every day) and check again. If it's not nice and snug then there may be an issue with the gasket.
The last series engine I worked on was a SIII 2.25 diesel. I don't recall the head gasket material, but it torqued up fine and the re-torque was probably a waste of time as it was nice and snug anyway.
2013 D4 expedition equipped
1966 Army workshop trailer
(previously SII 2.25 swb, SIII 2.25 swb & lwb, P38 Vogue, 1993 LSE 3.9V8 then HS2.8)
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