I'm fairly new to boats and have a 98 Merc 502 with water in the oil.

What are the steps I should go through to diagnose where my issue is?

From what i currently understand the issues could be:

Water leaking into the exhaust, water leaking at oil cooler, water leaking at intake manifold or a blown head gasket?

Am I on the right track? Should I look for the leak in that order? The engine has Eddie Marine Thunder exhaust if that makes any difference.

Thanks!

Tell us more about the motor and the history

How long have you had it and did this just start?
Do you boat in fresh or salt water?

sorry I should have mentioned that. I just bought this boat. During the test drive you could see the milkshake bubbling under the valve cover when I removed the vent and also there seemed to be steam coming out of the vent as well.

I don’t have much history on the boat but it looks to be mainly freshwater use.

You don't want the motor to sit long with water in it. Do a quick compression test and hope it's just a blown head gasket. If compression checks pull the exhaust and see if there is any signs. Next would be the intake.

Its not the oil cooler because oil pressure is higher then the water pressure

I had some 502’s that started showing signs. Amongst several issues I had, the most prominent was likely where the intake manifold sat on the head they were rotting due to dissimilar metals.

I trashed the heads and both manifolds during my rebuild (and everything else other than the block, flywheel and crank.

Good Luck!!!

Is this an improper winterization issue? Internally cracked block/head(s) leaking water from the cooling jacket?

oh man that would be a bummer!!! I will be diving into the engines next week trying to diagnose the issue

I highly doubt it as this is a west coast boat

got it thank you

why did you go through with the purchase when you clearly saw the engine failing