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Normally the oil cooler allows oil into the coolant before coolant into the oil........ You did use a new valley pan ........ VPs are not reusable. Other place for coolant leak could be behind the water pump on the front cover. I think you need to drain the oil......remove the oil filter and pressurize the full cooling system to about 18psi. see where the coolant comes out........ pan hole or oil cooler at the filter header.
If it comes from the pan..... that will be hard to pinpoint.......
One other way would be to pressurize each GP hole with cylinder at bottom dead center see if air comes out the rad.
The best place for coolant to get into the oil is the timing gear cover that divides the timing gears from the water pump.
In the oil cooler, when the engine is running oil pressure is higher than coolant pressure.
So the oil usually goes to the coolant side.
Coolant into the oil at the oil cooler usually only happens when you turn the hot engine off, because the coolant pressure remains high when there is no oil pressure.
At the timing gear cover plate, there is no pressure on the timing gear side and at least water pump pressure on the coolant side or as the engine warms cooling system pressure on the coolant side.
I don't remember who it was, but they found a pinhole in the timing gear cover that was letting coolant into the oil while running.
It would be impossible to fill the radiater and not notice oil in it.
Earlier he said water in exhaust did your have the antifreeze smell.
If it is infact going out the exhaust pipe wouldn't that eleminate the oil cooler and the timing gear housing.
I appreciate all comments and ideas they are most helpful!
I don't think the water leaks directly into the intake or into the cylinders, it is not a huge amount of steam that goes out the exhaust. I think its steam that comes from the water in the oil that travels to the intake via the crankcase ventilation.
When I have had the engine running for a while, turn it off for 1hour and then fire ut up again I see water spitting out the exhaust, my best guess is that the water should continue to steam up in the crankcase ventilation while the engine is turned off but still warm, and build up in the intake until I fire it up the next time?
If I fill up the radiator with water, and leave it there it will slowly travel into the engine but stop when only around half of the radiator is filled, that should indicate that the leak is in the upper parts of the engine, timing gear cover around the water pump?
When the engine is on, it will leak in water to the oil regardless of how low or high the water level in the radiator is.
Going to remove the water pump and take a look. Will keep you posted!
When you remove the water pump check to see if there was any sealant applied to the 2 center top and 2 center bottom bolts. They pass through the coolant and into oil systems and were supposed to have Permatex Aviation #3 applied at heads and threads. Bolt torque on the water pump is a maximum of 14lbs or you strip out the ones into the front cover only.
These are also the bolts of a required length so they do NOT extend too far and contact the timing gear and snap the mainshaft on the IP.