If oil is leaking outside, how would it mix with water? The head gasket could be corroded through by one of the drain back passages. If you have access to a "smoke machine", you might be able to find the source of the leak by forcing the smoke into the dipstick tube. It will only be under 2 pounds of pressure. That might not be enough to make the leak show up.
You can also wash the area, then add a bottle of dye to the oil. Drive it long enough to cause the leakage to show up, then use a black light to locate the source. The dye will appear bright yellow.
Tuesday, January 11th, 2011 AT 1:01 PM