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oil/water mix everywhere!!

hey guys first post. I have a 1986 Wellcraft 230 with a mercruiser 260/V8 that i just purchased. First thing i did was take it out and noticed slight over heating so i replaced the thermostat and the impeller. Took it out today for a couple of hours and temperature was fine the whole time.

Took out the transom plug and gallons of hot milky white oil/water mix came out. I opened the engine cover and it was covered with oil/water milky mix everywhere. I brought it home, put muffs on, and started it real quick to try and see what the hell was happening and it was shooting the oil/water mix out of the spark arrester tubes on the valve covers. It also looked like it was leaking water near the crankshaft pulley on the block?? Any ideas?? It starts up and runs fine (from that one start I did, I am not starting it again after I did that). Also the dipstick is completely covers with water/oil mix.
 
I just took a closer look. It looks like the water pump housing in the front is what was leaking the water. Could this cause the oil mixing in as well?? Why would there be oil mixed if its just the water pump leaking??
 
There is no doubt that the engine is wasted.
Stop fooling with it immediately. Anything you do now to try a quick fix will just make matters far worse.
If you have not already, another start could seize the crankshaft. That would add another $150 to the repair cost.
Bite the bullet and dismantle the engine, taking lot's of photos as you go.
If the block is good, rebuild it. Any good engine builder can do a basic job on the block and heads for $1000.
A rebuild kit is usually about $250 including pistons and all of the needed small parts.
If the block is cracked, buy a short block, or a used engine again for less than $1000 out of a highway wreck.
if you have a basic SBC, you can do all of it yourself for $1000. and end up with a brand new engine.
Just don't get HP crazy. Keep it simple and save lots of money.
 
Thanks guys, this sucks. Im going to start looking for a sbc 350. I am going to search the forums to see if I can find any good info on the swap and see if everything external is interchangeable. Thanks again.
 
There is no doubt that the engine is wasted.
Stop fooling with it immediately. Anything you do now to try a quick fix will just make matters far worse.
If you have not already, another start could seize the crankshaft. That would add another $150 to the repair cost.
Bite the bullet and dismantle the engine, taking lot's of photos as you go.
If the block is good, rebuild it. Any good engine builder can do a basic job on the block and heads for $1000.
A rebuild kit is usually about $250 including pistons and all of the needed small parts.
If the block is cracked, buy a short block, or a used engine again for less than $1000 out of a highway wreck.
if you have a basic SBC, you can do all of it yourself for $1000. and end up with a brand new engine.
Just don't get HP crazy. Keep it simple and save lots of money.
Sorry but this is absolute rubbish. You must buy a marine engine not something from the local pic-n-pull. You may be able to find a good running take out but if you want a proper refurbished engine with warranty then you'll be spending about 1800 plus shipping plus installation.
 
FYI, a raw water cooled 33 year old engine block is not rebuildable.

Pull the thermostat housing on your engine and look for a hole in the water cross over right below the t-stat housing...
 
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