3HMF with greyish oil & leak

Hi,
I noticed after Spring launching that the oil in the engine had turned a greyish color. I put in fresh oil and after running it a number of times, it has turned that way again and is not as viscous as it should be. It is also oozing oil out of the parallel pin on the top of the engine (see pic of greyish oil leaking). When running the engine, I do not see any liquid dripping from the engine and I watched closely at the impeller pump and it seems to be running OK with no external leaks. I'm guessing water is mixing in with the oil somewhere. Does anyone have any thoughts on what the problem might be?

Thanks so much for your input!
Steve

Remove and inspect the water cooled exhaust elbow, there are two types a down angle aprox 45 degree and a up down gooseneck.This elbow may have corroded in side allowing sea water to back in to rear cylinder and into the base.
Rare but not impossible is the exhaust manifold then the cylinder head