Careful, it's not ALWAYS a leaking cooling system, but in your case it probably is because you said you're losing coolant.
I had a similar "milkshake" problem with my MG 30 years ago. Living in California, I had removed the thermostat in my naive attempt to make cooling more efficient. Everything was fine. Until I moved to Ohio and winter set in.
I went on a long winter trip (8 hours of driving) and it was near 10 degrees F through the whole thing. Just as I returned home and pulled into my driveway, my oil-light came on. Investigation revealed that all of my engine-oil had turned into "milkshake" as you called it, and it was all clung to the inside of my engine-block and valve-cover as whipped-cream. So there was no longer any oil-flow, which made the oil-pump run dry. Lucky for me I had made it home.
Without the thermostat, the engine and its oil never reached the proper temperature. It was warm enough to heat the inside of the car, but any water that got into, or condensed, inside the engine-block (main by-product of combustion is water, and it was snowing thru most of that trip) couldn't "boil off" or "remain in vapor", and it all got whipped into the oil, which turns it all into whipped cream.
So I put the proper thermostat back in and I never had that problem again. A stuck-open thermostat would have the same symptoms.
BTW, don't make the mistake of just adding more oil willy-nilly. All that oil-foam will reconstitute back into a liquid when the engine reaches a high-enough temperature, and you'll have an over-filled crankcase.
Friday, January 6th, 2006 AT 2:06 PM