Hi, I drive a 1989 Toyota Corolla All Trac, 4WD, 4AFE engine, 1.6L, fuel injected, five speed with 211.000 miles. This is the second engine in the car, and it has fifty thousand miles on it since I installed it. Today I noticed oily fluid spraying from the bypass hose. It had not overheated, but does have a hole in the bypass hose connecting the block to the water pump. From this leak is an oily mix of crankcase oil and antifreeze. The crankcase oil remains clear and clean. The engine is running great. I topped off the radiator with water and made it home. When I shut if off a lot of air leaks out of the hose. Surprisingly it doesnt seem to leak as much when it is running. It has not and does not overheat, blow steam out of the tail pipe or show any other symptoms, but must have a breach between the oil and cooling systems.
I thought a blown head gasket would push water into the oil not the other way around. Maybe this is a bad head gasket, cracked head, cracked block but how can I determine this? How important is it to flush all the oil out of the cooling system, and how to do it? If its only a head gasket I will want to repair it, but if the block or head is cracked then it may be too costly, for an otherwise great but rusting car.