Bill & Judy Rouse <yahoogroups@...>
I think that for water to be in the oil from the exhaust, it would have to be pushed past the pistons and rings. This is unlikely because if seawater enters through the exhaust system, it will usually bend or break piston connecting rods.
If your coolant level decreased at the same time, it is most certainly a blown head gasket or cracked head. Did the coolant level decrease? Can you estimate the total increase in volume of the oil including the water?
The most likely cause is a blown head gasket, or some other breach in the coolant pathway. I think that you should get an Onan mechanic on the boat. If you are still under Amel warranty contact SAV.