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Blown Head gasket or worse? 700

1991 Volvo 740 Turbo

It appears I have water in my engine. Dip Stick is milky brown and oil cap has a white sludge.

Earlier to day I was getting back pressure in my coolant reservoir and white smoke but car seemed to be running fine.

Last time I tried to start it there was a terrible grinding sound and now we are locked up.

I considered draining and replacing the oil to see if there was any hope, but I guess there is no reason to do that until I find the underlying cause of the water?

Note that I recently replaced the thermostat. It is possible that my son drove it in an overheated condition.

Thanks in advance!






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