what the heck

The tough part is this could be coming from a number of sources. anything from a crack in the head or a cracked block. It could come in from the timing chain cover area through a worn/cracked cover, etc. another source could be the lower intake or the head gasket oddly enough. I know you just installed low mileage heads but there could be slight chance they have a hairline crack in them. I would look at the timing cover again since you just did that, also recheck the lower intake.

wlabrum said:

carbed motor
took out of pickup to put in 88 drop top
old motor had a bad valve seat so i swapped heads with known good used ones
there is no water in oil
but oil in water
has 5 spd so its not transmisson fluid
going to flush cooling system and pressure test

Click to expand...

That is a good start but just because the other symptoms listed by us most of the time present with water in the oil doesn't mean it's always the case. A cracked/worn or leaking timing cover can do the same just like a lower intake gasket and a head gasket. don't rule it out just because of how the symptoms present.