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No one in Merc land wants to help? The water you see was in the oil, just not enough to turn it milky yet. You could have an oil sample tested. Could just be condensation if you dont run often or long enough to burn it off. Pull the spark plugs with the engine cold look for any sign of water. If so most likely your risers are bad.I have a 5.7 Mercruiser inboard running fine no water in oil and not overheating. After it warms up I am getting steam out of the valve cover vents. Took off pcv elbows and I can see a small amount of water in there. Any Ideas what is happening?