Finally got the CRD running. We noticed what looked like steam coming out the exhaust and check coolant reservoir and oil dipstick. Noticed water in the oil pan but no oil in coolant. Drained the oil and refilled. Ran a few more times idling in drive way for about 20 min. Noticed water in the oil again. I replaced the oil cooler gasket as I knew it was falling apart when putting the engine back together. Oil was drained and topped off. After a idling for a few 20 min intervals over a few days the same issue is there. I'm about to top off the oil again after draining and add some head gasket sealer to the coolant. I've been putting this off as I don't want to use the sealer if the problem is repairable without getting another engine. I don't believe it's a head gasket issue as the combustion chambers should have more pressure than the coolant system pushing oil into the coolant passages vice the oil pan where it keeps going. Has anyone experienced this?! Am I going crazy?! Thanks in advance for any help or suggestions you all may have. Our 1st CRD. We know they can be a pain to fix and maintain but are still looking forward to using it regularly one day.

How quickly is water draining into the oil pan and how much?

Get a cooling system pressure tester and pump it up to 16 psi.
Remove all 4 glow plugs and unplug all 4 injectors.
Crank the engine and watch for water shooting out the glow plug holes.

If water comes out the glow plug holes then it’s either bad head gasket or a cracked head.
If not, then the problem is down in the block.

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U.S. Army Retired

Thanks. Head gasket is brand new though. Any chance it would be an internal crack in the oil cooler?!

Yes. It’s a possibility.

Been there, done that, and had oil in the coolant.
(Oil pressure is higher than coolant pressure)

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U.S. Army Retired

With that same logic of pressure, wouldn't that rule out a cracked head?!

Nope.
Because cylinder pressures are always changing.
On the intake stroke, there is little pressure.

I’ve dealt with a cracked head also.
Lots of steam out the exhaust.
Water in oil wasn’t immediately noticeable but there was some evidence of it.

Do the test I described above.
It’s possible that it’s neither the head nor oil cooler, but something much much worse. But you won’t know until you do some diagnostic testing.

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U.S. Army Retired

K-Seal seem pretty good if you want to just dump in a bottle and see what happens.

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U.S. Army Retired

Thanks for the advice. Might try the bottle of blue devil I've had sitting around for this.