[Mo]

Don't under estimate the possibility of a water pump seal failure. If that engine was running perfect and you just found water in the oil, no steam out the exhaust, not missing, plugs are clean of water drops, compression?.....I'd be trying another pump on there before I'd be doing anything.

Kiskadee had a similar issue a few years ago...he though he needed an engine and was in a remote spot in BC on holiday when he noticed water in oil. Although we now live on different coasts, we both belonged to the same club here in Halifax and he's a facebook friend. Saw his post on facebook stating he needed an engine and noted the marina he had stopped at. Googled their business and called the number and talked to him. Convinced him to order a pump. He did so from Moyer, had a courier bring it and it was indeed the problem. The price of a pump saved a tear down. The pump was the problem.