"You don't say what model
"You don't say what model and year drive it is, but I am guessing that its not equipped with a remote lube oil monitor bottle.
The grayish color definitely sounds like water in the lube oil. The pressure testing that Ryan suggests is definitely the right idea. You may get lucky and have a leaky shift shaft seal. This is a common problem on Alpha II drives, and its easy to replace.
Once your sealed again, you should consider putting a lube oil monitor kit on. They are not expensive.
The great thing about them is that they keep a positive pressure inside the case relative to the water (the oil monitor is higher than the water hopefully)and a leaky seal will let oil out, but water wont get in.
Rod"