engine not running

i just bought a 94 mustang v6. It is currently not running. the problem is that when turning over the engine, water starts to come out of the exhaust. also when i checked the oil level, the oil was like brown mud and was past the full mark by 3 inches. I drained the oil and it seems that there was more than double the normal level of oil there should be. It was very thick and brown. would that because of water getting into the oil? There was also no thermostat in the engine, would that cause the problem? any ideas on what the problem could be would be very helpful
 
They are known for leaky head gaskets so you need to replace those first. While the heads are off make sure they are not cracked or warped. That's why your oil looks like a milk shake and is too full.