Classic/Antique Car Repair: water in oil, ford ranger truck, ford ranger

Question
i am redoing a 1989 ford ranger truck and the engine has water in the oil. it is a 2.9. out side of this the truck is in good shape.

Answer
My response to this question was delayed by a system problem at AllExperts - I've reported this but so far have not heard back from them.  I'm trying to send this to you for the 4th time now!

This is very bad news - probably the engine is a goner - you either have a crack in the block or head, or one or the other is warped due to severe overheating, so that the gasket has blown.

If you are game for rebuilding an engine, you can try taking the engine all apart for inspection, but very likely you are going to wind up just replacing it anyway, so you could save yourself the trouble and just check your local junkyards for a guaranteed good used engine. That will be much cheaper than rebuilding your busted engine.

Dick