Water in the engine w/ the oil! What now?

[walker]

The tests are going to tell you where your coolant is going. The compression test will tell you if you have a blown head gasket by low numbers on one or adjacent cylinders. The stand up test will tell you if you have a crack in your cylinder head by blowing air through the crack and into the coolant. The last test is head gasket and head crack test, as bubbles going from the cylinders will bubble up through the neck of the radiator. If these tests come out good you could have a leaking intake manifold. The cooling system pressure test may give you some indicator of where the water intrusion is by leaving water in the cylinders or in the lifter valley( you can check that by removing the dist.
Find the trouble for sure before you tear into it or you may do unneeded work, or you may do the work and find out you didn't fix the problem.
My own case, it turned out that I had a cracked head. So I replaced the heads. Still had water, so I redid the tests. Tore it all down again, turned out I also had a cracked block, in between the #3 and #5 cylinders at the head bolt hole. If I assumed it was a manifold gasket I would have had to dig into it three times. It was bad enough doing it twice, but that could have fooled many people.
BTW anyone wants a set of camel humps with a crack under one exhaust seat let me know.