S2. Water in the oil, likely cause?

[Richard48Y]

The S2 from Palm Springs has water in the oil. 

I've been asked to fix it and wonder if it is more likely to be:
A. Head gasket.
B. Failed cylinder seal.
C. Other?

Really want to avoid a full engine rebuild if that may be done responsibly.
Of course a means of determining the fault would be very helpful.
Compression check should help with the head gasket.
But how to check cylinder seals?

[TurboFource]

Perhaps a leak down tester... if the head gasket leaked maybe you could hear the air leakage from the tester at the valve cover and a cylinder base seal you could hear through the dipstick tube  . at least you could pinpoint the cylinder...

[califkid_66]

a leakdown test will give you a pretty good idea of the engines condition
if there’s a problem

intake valve  sound from carburetor
exhaust valve sound from exhaust
piston rings sound from dipstick
head gasket bubbles in the antifreeze
but i have no idea for the bottom sleeve gaskets
i don’t know how to test the sleeve gaskets if the leakdown turns out ok
i would change the oil crank it a bit and check the oil to see if there’s water in the oil
then by deduction it as to be the sleeves gaskets

the water could also be humidity i had some in my transmission it was because of a clogged breather
 
i waiting to see other opinions

[Clifton]

You can have a HG leak between the oil and water and not effect the cylinder and you can have a leak between cylinder and water. If a cold engine builds enough pressure that you hear it when opening the radiator cap after 5-10 seconds of running, it's a HG. I've never had a oil/water leak to say an easy conformation on that.

[Grumblebuns]

The S2 has been sitting for at least two years. Did you manage to get it started and running?

[Richard48Y]

Got it running few weeks ago.
Had some odd issues, lines to the fuel tank were reversed and none of the dash grounds were attached.
All the wiring I traced was correct.
Seller did not supply the correct keys so that made work just a bit more difficult.
Oil has been changed, I am going to suggest a couple of test and running it to see if the issue persist.
I would not have thought of Palm Springs as particularly humid but there was some surface rust at the top of dash gauges. Sunlight did the most damage to the dash and interior.
I really do not want to travel to Monterrey again to work on it.

[jbcollier]

Drop the oil pan and pressurize the cooling system.  Should be clear pretty quick if the coolant is running down inside or outside the liners.

[GavinT]

Agree with JB re dropping the oil pan.

Most of the dia warnings foreshadow accidentally disturbing the liners while removing the head but in practice, liner seal leaks don't seem to be very common.

Some engine history could be useful.
Perhaps the head wasn't torqued down the second time?

[Grumblebuns]

From my previous discussions with the previous owner, he did not mention that any work was done on the engine during his ownership. I'll contact him to verify this.