Sounds like a blown head gasket. The head could also be cracked. If the engine hasnt been badly overheated to the point wherethe bore and rings have glazed it should be ok to replace the gasket. the head should be resurfaced and pressure tested before it is refitted. If it is a high milage engine that is burning oil I would sugest replacing the engine or if the car isnt in cood general shape selling it as is as spending large amounts of money on an engine in poor condition would be pointless.
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