No, you don't get into the water with the head bolts. Also, the only small block that you run into that with is the 302 based blocks (and small block bowtie junk). 351W head bolts don't hit water.
Keep in mind that there are some other spots on the FE that do hit water though....for instance there can be timing cover bolts that hit water and need to have thread sealant on them. Just take a few minutes and poke around with a screw driver to see if it bottoms out or hits an area where water is.
As for bolt torque, I'll tell you this: ARP has updated their lubricant in some of their fastener packages. The ones that are updated have a piece of paper inside that will tell you what to torque to. Make sure the threads are clean, use the lube, and torque in 3 steps.
As for the sequence, here ya go:
http://www.edelbrock.com/automotive_.../6000/6007.pdf