Smoke from 1988 fox

Pay no attention to the man behind the username, he is the leader of the 'box head gang', yes I am a member too but that is for another thread.
Or not.
Now about that milkey substance, here is what I would do:
Change oil and filter, put inexpensive oil back in, the engine may need a teardown anyway so don't wast money on the latest, greatest lubricant.
What am I say'n, you will be tearing it down to some extent.
Pull the spark plugs noting the condition and keep track of which one came from what cylinder.
Do a compression test and note the psi for each cylinder.
You can rent a compression gauge from the local auto parts store.
If you have never done it before google is your friend.