955H 60A Gray Oil.

Coolant or rainwater. If the stack was covered, it just about has to be coolant. Not hard to miss being a quart low on 6-7 gallons total capacity. Since it didn't hydro lock when you started it or blow black water out the exhaust, I would check for bubbles of compression showing up in the radiator while running.

If finding none, assume a lower liner o-ring leaking. I have sealed up a pretty serious leak there with radiator stop leak. The liner seals are a good application for this treatment since the particles settle into the right area and there is relatively little pressure. There are also some freeze plugs under the valve covers that I had rust through, so it might be worth a look under the valve cover while it's running. I just lucked out and started the engine with the cover off. The seep turned into a squirt so I found it.

Coolant or rainwater. If the stack was covered, it just about has to be coolant. Not hard to miss being a quart low on 6-7 gallons total capacity. Since it didn't hydro lock when you started it or blow black water out the exhaust, I would check for bubbles of compression showing up in the radiator while running.

If finding none, assume a lower liner o-ring leaking. I have sealed up a pretty serious leak there with radiator stop leak. The liner seals are a good application for this treatment since the particles settle into the right area and there is relatively little pressure. There are also some freeze plugs under the valve covers that I had rust through, so it might be worth a look under the valve cover while it's running. I just lucked out and started the engine with the cover off. The seep turned into a squirt so I found it.

I am a diesel mechanic of 60 years and have to confess my screw up. Checked my oil ( engine not running) OMG!!! grey oil and OVER FULL. ( normal to be above the mark when NOT running) That fact went right over my head. Drained the oil into clean buckets. Pulled the side pan covers looking for lower liner leaks. None found. Pulled valve cover looking for moisture or soft plug leaks as Jersey suggested then also. Found no moisture. Bought and added stop leak anyway. Cleaned heavy sludge from pan while I was there. Replaced oil with high detergent 15/40 AGAIN. . Oh yea, check the oil when running. Light comes on! It wasn't over full after all. Going to save that oil to see if water separates out with time. Nope, never separated out. Why was it grey?? 70 years of sludge then put high detergent oil in it was my conclusion. 240hrs on it since and no problem. Are you sure it is water in the oil??

I lucked out there. I couldn't get to the dipstick without it running. The loader arm blocks the hole in the side cover to access the dipstick. Today I will triple check everything to be sure. I've been running the same oil in it since I bought it in 2008. I use the Straight 30 diesel oil from Tractor Supply. If worse come to worse, I did luck out a few years back and got an engine kit, cheap.

Well.....Checked the ole girl over. Fired her up and checked the oil again. Still over full, but now getting milky. No bubbles in the coolant or signs of oil. Coolant level remained the same. Removed the oil fill cap and noticed condensation that was crystal clear. No fuel or coolant smell in the oil. As I walked around the machine, scratching my head, I looked down at my coffee can stack cover. Picked it up and looked through it at the sun. Low and behold, a pin hole. Think I found my problem.

If it clears up with a good exhaust cover problem solved. For no more than the the $20 or so cost, I would send the oil in to have it analyzed to find out if it is water or anti-freeze in the oil. Your oil supplier should be able to tell you where to send it. We do it all the time in our farm tractors.

Cut an oil filter apart for an exhaust pipe cover. Many engines ruined from rusted coffee cans.

I don't see how water down the stack would end up in the oil pan, I can see rusty bore, hydro locked bent rods. stuck valves, stuck engine broke pistons , but I don't see a path to the oil pan. Might be a freeze brake with the rain water, then into the pan. better do some looking and change the oil asap....WA7OPY

Cut an oil filter apart for an exhaust pipe cover. Many engines ruined from rusted coffee cans.