Yes Phil, the Loctite product you refer to was the original Permatex No.3 Aviation Form a Gasket. And you are correct in stating it won't seal the water pump cover. The reason being it is designed to be used only on precision joints of rigid castings where no distortion can occur, that's why it is excellent for joining crankcase halves like on VW engines (and of course aircraft engines).
It will not dislodge from the joint inside an engine and travel through the arteries like a piece of nasty cholesterol, eventually causing a stroke ! The added bonus being it is not disloved by petrol, unlike Silicone, which is definitely allergic to petrol.
Silicone on the other hand, is quite good for sealing less accurate joints such as the water pump cover as it can take up irregularities and cope with expansion/contraction due to temp changes.
My favourite case jointing compound of all time though, was Yamaha Bond 3, used in the '70's as original equipment, fantastic stuff but no longer available I'm told.