I have an 03 mercury 496mag and I am getting water in the oil not a lot just enough to make it milky My first thought was the oil cooler but I figured the oil pressure would be higher then the water pressure what do y'all think it could be?

I'd start with a compression check. I would definitely NOT run the motor until the problem is solved.

Oil cooler, antifreeze, or exhaust.

check the plugs. pressure test coolant tank and let sit for couple hours.

I have checked compression and it is perfect and Exhaust is in great shape also I figured if it was the oil cooler I would be getting some oil out of the exhaust am I right in thinking that

You have to pull the manifolds off to say exhaust is in "great shape". Keep going until you find it. Pull the cooler and have a look. If you say the amount of water in oil is minimal then how could you be sure that you would see it in the exhaust water. You might and you might not. So many variables.

Is it on a hill? Is the water running away quickly? Is it not enough to show heavily in the water? Is the exhaust leaking but you think it looks fine on outside? Is the closed cooling system leaking into the crankcase??

Best bet is to get to work and find it. Internet diagnostics are not very accurate many times.

Fix it quickly. Change the oil and run it warm. Change the oil again and monitor. May need to change oil 2-4 times. Gotta get the water out of it if.

If you can't run it much or work on it now, pull the plugs, drain the oil & fill the crank case with diesel fuel. Crank it over (no ignition) and move the diesel around in the engine. It will save it if done properly and will buy you time. Don't "trust" the exhaust just because it looks good.

Compression test will not find source of water.

Lets have some more information here?

Do you have stock exhaust?

Is the coolant level in the closed cooling system going down?

Have you pressure tested the closed cooling system. Use a Stant type radiator pressure tester and use the (BMW) screw on adaptor. Pump the system up to about 13-15psi and see if it holds for an hour or so.

Do you boat in salt water?

Oil coolers can get pinhole or cracks in them and water can enter the system there but its pretty rare.

Just a cup of water in 9 quarts of oil ina 496 will mix up and look like a lot of oil when it milkshakes.

If you got milkshake showing up on the dipstick you've got a lot of water intrusion. Usually, the dipstick does not show water in oil well at all.

Remove the valve covers and see how bad it is under there.
then a SD Fever says get that old oil and filter out, flush and refill with new oil and filter and recirculate just enough to remove some more of the water and water saturated oil. You can use a less expensive oil for this process as you may have to dump it a few times.

Best Regards,
Ray @ Raylar

The exhaust is new this probmen is happening on both of my engines when I first bought the boat I pulled the engines and replaced the manifolds due to corrision problems from sitting I also drained all the oil and there was mabe a cup or less of milky oil in both I thought it could be condensation from sitting but now I am starting to think diffrent the engines only have 100 hours on them and start and run perfect I have not noticed my cooling level going down at all and both engines have ran at an idel for at least an hour to check for that I am going to check the oil coolers today when I get home the boat came out of Maryland I think it could be possible for them to have froze it looks to me like they are the low point on the engines cooling system where water could of been trapped

If you have checked the exhaust and its not leaking. Pressure test oil cooler. If your exhaust runs down through the bull horns, Y pipe or both you should have a exhaust shutter in the Y pipe at the down hose connection point. Sometimes the boat when sitting in the water will allow water to come back up into the elbow, then into the manifold. You would notice rust on your spark plugs most likely if you pull them.

If the engines had raw water in the oil coolers during a freeze period they could be damaged by that water freezing inside the coolers. Easy to pressure test them and find a leak or leaks if they exist. I don't believe you answered the question yet of are you loosing coolant from the closed cooling system, ie is the level in the coolant overflow bottle going down? If so pressure test that coolant system also. Did you put the same stock 496 exhaust system back on the engines or an aftermarket system or header?

Best Regards,
Ray @ Raylar