Well I just changed out the oil (it was in the transmission not the rear diff). I filled it with some motor oil I had and drove it around the block, then drained it again (still frothy, but better). Now I am going to fill it with 90w and see how it looks after the next trip.

Where would I look for vents? Any other ideas on how the water got in there? It was very thick and frothy and it just doesn't seem too likely that it was driven that far under water - but of course anything is possible!

Thanks for all the help!