If you're getting that much water in the oil, I would suspect coolant. I never ran a Chev, all GMCs, and if it were a GMC I would suspect a cracked head. A compression leak down test would tell for sure. Or take all the plugs out and roll the cylinders to TDC one at a time and put about 110 lbs of air pressure to each cylinder for for a minute or two. If you get bubbles in the radiator, you have a problem.
