Hi, there is water mixed with the oil in the sump. Water is evaporating and running from somewhere on top of the engine . I suspect its coming out of an overflow but not sure. should I just put new oil?

You are about to lose the whole engine. The issue is a head gasket that is bad. Could be a cracked head too.

hi there.
Water in the engine - Water can get into your oil sump in two ways: ... Water in the oil- Coolant leak due to non-watertight seal (cylinder head gasket, etc.). If this happens, there is a leak and water is getting into the oil.
Water in engine oil
If you found water in oil car , this water engine car section is for you!
Water in car engine? Water should never be allowed to get into the oil in your engine or gearbox. Otherwise, it will result in significant foaming, dramatically reducing the product's lubrication properties.
Water in the engine - Water can get into your oil sump in two ways:

• Water in car - Water condensation in cold air or combustion gases: this phenomenon is extremely rare and only occurs at specific temperatures.
• Water in the oil - Coolant leak due to non-watertight seal (cylinder head gasket, etc.). If this happens, there is a leak and water is getting into the oil.

Water in motor oil can cause serious damage to your engine - the oil will be denatured and no longer effectively cooled.
Contact your repair centre as soon as possible.

toyota engine ...typicaly hilux Efi

inlet manifold gasket blown
corroded water jackets on the inlet side

if found to be sound
wont be long before the oil will mix with the sump
try re torque the head bolts as a stop gap
head warped or blown across water jackets of the block
and not the oil jackets yet

Um, most likely not good. Most likely means the block is cracked allowing the water and oil to mix. Major engine repair.

...

The fact is, it's going somewhere. If there is no leak on the floor, then there is only one answer really. Sadly, you have a breach in your head gasket. The water is either getting thriugh the breach into the sump (Check the level of your oil and check the underside of the oil filler cap to see if there is a nasty grey/brown emulsion buildup caused by hot leaking water mixing with hot oil. Alternatively, the breach is between a waterway and a compression chamber, in which case, the vehicle will probably berunning unevenly and there will be more whiteness to the exhaust than you would expect (Steam mixin with exhaust gasses). Either way, if there is no water on the floor, this is almost certainly a head gasket breach. You need to get it seen to as soon as possible. What may be a head gasket swap now (expensive enough as it is) could become a warped or cracked head if not looked at quickly

I am assuming its motor oil and not transmission fluid, right ?
You can have a leaking intake gasket or head gasket and get oil in the coolant without getting coolant in the crankcase.
Same thing opposite. The bigger the leak, the better the chance of getting both at the same time.

Sump temp sensor is not reading water temperature of water running over evaporator plate.This sensor is located in the water supply tube that runs up to the top of the evaporator plate. just pull the sensor out of the tube and replace it.

milky oil means water is mixing with it might be a gasket

Possible there is a cylinder GASKET failure or a BLOCK or head crack that makes the water jacket to leak into the main sump.
You need to confirm on this before the engine can be taken out. So check the oil in the sump to confirm. If so the engine has to be removed and checked.

have had this problem also with generators usually tell people to shut fuel tap when not used or transporting.the engine seems to create a siphon and fills the sump.drain refill with oil start again it may never happen again.