you shouls have looped the hoses at the thermostat housing and hooked a garden hose up to the water intake hose after the seapump and turned it on...then lister for water seeping into the engine....now that you took everything apart you may as well remove the engine and take the whole thing apart,send it to the machine shop and have the block,heads and intake pressure tested..if you still cant find a leak then the whols shabang will need to be lagnifluxed...

That is EXACTLY what was happening to me.

thats why I said to pressurize the cooling system.

I already had thee intake off before I read your post , I am going to pull the other head 2marro night just to check it out since im this far along , If I dont find anything I will but it back together run it see what happens , if she milks up again the motor is coming out ....

have the cylinder heads pressure checked before putting it back together . at least eliminate them from the equaition . You should have been able to see if the intake gaskets were leaking when you pulled the intake. What type of cylinder heads do you have?( GM iron heads are known for cracking )

Just had a milky oil problem after high sped running on a fresh rebuild.Re-torquing the intake manifold bolts fixed the problem.

Ok well not so good after pulling the last head and looking at in in good ligh tI found a cack in the water jacket running up into the lifter valley , looks like the douch I boght this from bent me over ! oh well got a new block on the way and going to swith out the internals..... I should have ben a lil wiserwhen I bought this thing and the oil looked brand new and he says It had not been changed in over a year from not using the boat ... yeah right.....

you still need to pressure test the heads and oil cooler just to be safe..

Will do , the oil cooler I already did , the heads are going to be done this week ..