underneath the valve cover on pass. side.Do i have water in the oil?I did not change oil more then 9 months,but i made just 10 mills on the oil, car was in the body shop.Engine was rebuild last year.Thank in advance

yea water radiator fluid and it helps to change your oil

Well hang on there, you said the engine was rebuilt last year, but you haven't changed the oil in 9 months? Change the dang lube man, and see if the problem persists. That gunk may just be metal filings that got deposited there during break-in. A coolant leak usually shows up in the pan and not just under the valve covers. You can never be too liberal with oil change after a rebuild, keep that sucker clean!

I did change oil twice since rebuild.

Is the car being driven or just running in the garage? Could it be condensation build up from not really warming up? Just thinking out loud...

It was driven for ten minutes,before was siting for 2 months.
I removed #1 head bolt and ther is not any sealer on the threads.
Do i have to drain coolant from the block if i want to reseal all heads bolts or just drain radiator?Thanks

I would suggest checking the oil level on the dipstick as a first step. I had an intake manifold leak that pumped the coolant right into the crankcase. My oil level was way above the full mark. Although with the milky color, it would definitely suggest water in the oil. Small amounts of coolant leaking at the headbolts would yield a visible amount of anti-freeze under the rocker cover. If the oil level is pretty high, it would indicate a fair amount of water has gotten in and most likely a manifold leak.

Suspects in my mind would be leaking or blown head gasket, leaking intake manifold (was the manifold changed during the rebuild?) or rarely, a cracked block. If you have a compression tester, run a compression test of all the cylinders (pull all the spark plugs and remove the distrubtor to coil wire). Your compression for each cylinder should be pretty close to each other. If one or two are down significantly (more than 10%), that may point to a gasket leaking which will need replaced.

Hope this helps.