I have a 91 6.2 and I replaced the IP about 1 month ago. I lined the timing marks up and took it to the diesel shop. The bracket that holds the probe to the harmonic ballencer is bent so they could not time the engine. They said it sounds about right.

I now have a blown head gasket or something worse. I have water in my oil, lots of white smoke and low water level. This engine has never overheated so I would be supprised if there is anything worse than a blown head gasket.

My gas mileage has not changed drasticly after I installed a new IP I still get about 20.

Can improper IP timing cause engine failure like blown head gasket?

It is possible, but unlikely. Usually the marks on the engine make the timing too far retarded, and that won't hurt anything. It's when the timing is too far advanced that it causes damage.

I have a 91 6.2 and I replaced the IP about 1 month ago. I lined the timing marks up and took it to the diesel shop. The bracket that holds the probe to the harmonic ballencer is bent so they could not time the engine. They said it sounds about right.

I now have a blown head gasket or something worse. I have water in my oil, lots of white smoke and low water level. This engine has never overheated so I would be supprised if there is anything worse than a blown head gasket.

My gas mileage has not changed drasticly after I installed a new IP I still get about 20.

Can improper IP timing cause engine failure like blown head gasket?

Yes , bad timing can hurt your engine.
You must try to keep it at 3 - 5 deg. advanced.
Take a look at this page.
http://www.v8dieseltech.net/
Hope it will help you on your way to a good running engine.
More english will follow.

Hey I just got my truck back from the shop they installed a new rebuilt injector pump. After picking it up I have noticed a big differents in horse power and its more senstive to the touch meaning it takes off in a hurrry.
As I popped the hood and looked things over I noticed they have the timing marks way off .The pump is about a 1/4 inch to the passenger side of the truck . After reading in the timing part of that page. I wounder is it going to be okay this way. It does run smooth . I also told them after reading a few posts here not to crank the injector up cause I like getting 20 plus miles per gallon .At this far I have not calculated my mileage yet .

JustOneTruck, if the shop that installed the pump set the timing, it is right. If they didn't bother, take it back and make them do it.

Sounds like they set it and in that case it is correct.